Mortgage misinformation is everywhere, and for Arizona buyers, those myths can delay homeownership or create costly misunderstandings. Whether you’re applying for your first loan or considering a refinance, it’s essential to separate fact from fiction. Common misconceptions about credit scores, down payments, interest rates, and closing costs prevent many qualified buyers in Scottsdale and the surrounding Valley of the Sun from taking action.
At Blake Mortgage, we’re here to clarify the fine print and eliminate confusion. Below, we break down five of the most persistent mortgage myths, so you can move forward with confidence.
Myth #1: You Can’t Get a Mortgage With Low Credit
Many people assume that a low credit score automatically disqualifies them from mortgage approval. This outdated belief causes unnecessary hesitation and discouragement, especially for first-time buyers. In reality, your credit score is only one piece of a much larger picture.
Lenders Evaluate Your Full Financial Profile: Income stability, employment history, debt-to-income ratio, and cash reserves all matter. Even if your credit score is less than perfect, strong income and savings may offset that concern.
Low Score Programs Exist: FHA loans, for instance, often accept scores as low as 580 with a qualifying down payment. These government-backed programs are widely available through local Arizona lenders.
Local Brokers Can Customize Solutions: Scottsdale mortgage lenders who understand the nuances of credit rebuilding can guide you toward asset loans or construction loans that align with your goals, even if your credit is still in recovery.
Instead of assuming rejection, talk to a mortgage broker who will review your unique situation and show you what’s actually possible.
Myth #2: You Should Only Focus on the Lowest Interest Rate
Many borrowers believe that chasing the lowest rate is the smartest move. While it’s tempting to shop around based on numbers alone, focusing only on interest rate can lead to higher costs in the long run. Working with a broker who helps you compare the total value (not just the rate) is how you secure the best rates from Scottsdale mortgage lenders without sacrificing transparency.
APR Gives the Full Cost Picture: Your annual percentage rate (APR) includes not only the interest rate but also loan origination fees, processing costs, and other lender charges. Comparing APR gives a clearer view of your true loan cost.
Low Rates Can Hide High Fees: A lender advertising a low rate may offset it with steep closing costs or additional underwriting fees buried in the fine print.
Personalized Service Has Real Value: A local mortgage broker can provide solutions tailored to your timeline, employment structure, and down payment ability. That hands-on service is often the difference between meeting or missing your closing deadline.
Choosing a lender solely based on rate ignores the broader financial picture, and that can cost you far more than a few points on paper.
Myth #3: You Need a 20% Down Payment to Qualify
The belief that you must have a 20% down payment before buying a home is one of the most damaging myths in real estate. It delays the dream of homeownership for thousands of Arizona families unnecessarily. The truth? You can own a home with significantly less upfront cash.
FHA Loans Allow 3.5% Down: With reasonable credit and documented income, many buyers qualify for FHA-backed loans with a 3.5% down payment.
Conventional Loans May Go Even Lower: Certain conventional loan programs allow for 3% down, especially for first-time buyers.
VA Loans Offer 0% Down: For qualifying military veterans, VA loans make homeownership possible without any down payment required.
Blake Mortgage works closely with borrowers to help them explore low-down-payment options and plan for costs like mortgage insurance when applicable. Putting less than 20% down may mean a higher monthly payment, but it gets you in the home faster and builds equity sooner.
Myth #4: Prequalification Guarantees Loan Approval
Prequalification is a great first step, but it does not guarantee final loan approval. Too often, buyers treat this early estimate as a green light, only to be caught off guard when the official underwriting process begins.
Prequalification is based on limited, self-reported information. Once you’re ready to move forward, lenders will verify every detail, including:
Income and Employment: Pay stubs, W-2s, tax returns, and job history must all be documented.
Credit Report and Debt Obligations: Your credit history will be pulled and evaluated in full, including any outstanding balances or monthly obligations.
Asset Documentation: Lenders need to confirm the source of your down payment and closing funds to comply with federal regulations.
Final approval often hinges on information uncovered during this process. If your financial picture changes, your final loan terms may change, too. That’s why it’s critical to work with Scottsdale mortgage lenders who are transparent about what prequalification means, and what it doesn’t.
Myth #5: All Closing Costs Are Disclosed Upfront
It’s a common misconception that all closing costs are known from day one. In truth, closing cost estimates can and often do change throughout the loan process. The timing of disclosures matters, and understanding how they work helps you avoid last-minute surprises.
Loan Estimate (LE): Within three business days of submitting a full mortgage application, lenders must provide an LE outlining projected costs. This includes origination fees, title insurance, taxes, and more.
Closing Disclosure (CD): At least three business days before closing, you’ll receive a finalized disclosure. This confirms actual costs, but some third-party fees (like prepaid taxes or homeowners’ insurance) may still adjust slightly.
Escrow and Insurance Variables: Costs related to your specific home (tax assessments, HOA dues, or hazard insurance quotes) may shift based on real-time provider quotes or prorated obligations.
Arizona borrowers should always review both documents carefully and ask for clarification when amounts don’t align. At Blake Mortgage, we walk clients through each line item in plain language so they understand what’s changing and why.
Bonus Tip: Mortgage Brokers Offer More Flexibility Than Banks
While not a myth per se, many borrowers don’t realize how much more flexibility they have working with a mortgage broker versus a direct bank. Banks typically offer only their own loan products. Brokers like Blake Mortgage can source from multiple lenders, helping you:
Find better terms based on your financial profile
Compare rates and fees across different institutions
Secure alternative programs like bank statement loans or construction loans
Receive guidance tailored to Arizona lending laws and Maricopa County market conditions
We’re here to make the mortgage process clear, not confusing.
Clear Up the Myths With Help From Blake Mortgage
Don’t let myths about credit, down payments, rates, or prequalification hold you back from owning a home. At Blake Mortgage, we focus on helping you make informed decisions; with guidance, clarity, and local expertise you can trust. We’ve served Scottsdale and the surrounding Valley since 2002, providing ethical lending solutions and exceptional service to buyers just like you.
Whether you’re buying your first home, refinancing, or exploring construction loan options, our team is here to help you every step of the way.
