TikTok’s Viral Home-Buying Advice Could Cost You Big — Here’s Why
Written by
Laura Beck
Edited by
Jordan Rosenfeld
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TikTok is full of quick tips and viral advice from influencers. Personal finance and home buying are especially popular topics. But while some tips might be helpful, others are spreading harmful myths.
Buying a home is one of the biggest decisions you’ll make in your life. And getting the wrong information could mean making some expensive mistakes.
Some of the most popular advice on TikTok sounds believable, but it’s usually not the whole story. Before you trust everything you see, it’s important to separate fact from fiction. Here are five pieces of home buying advice to be wary of.
You Need a 20% Down Payment
A common myth, perpetuated on TikTok, is that you can’t buy a home without a 20% down payment. It’s true that putting down 20% can save you from paying private mortgage insurance, but it’s not an absolute must.
“TikTok loves to tell you that if you don’t have 20% to put down, you’re not ready to buy a house,” said Dan Hnatkovskyy, co-founder and CEO of Jome. “But here’s the truth: You don’t need 20%.
“Many lenders offer mortgages with down payments as low as 3 to 5%, especially for first-time buyers. Instead of stressing over saving for years, focus on building a solid credit score and exploring programs like Federal Housing Administration (FHA) loans, which can make homeownership more accessible. You’ll still want some cushion for closing costs and home repairs, but don’t let the 20% myth hold you back.”
Saving for a 20% down payment could take you years. And when home prices keep going up, the goalposts are constantly moving. While you’re saving, you’d be missing out on the benefits of homeownership, like building equity or avoiding rising rent costs. It might not be worth it for you to wait to save 20%.
Don’t focus on just the down payment. Think about your overall finances and what makes sense for you.
Only the Wealthy Can Afford Homes Right Now
With rising interest rates and home prices dominating the headlines, it’s easy to feel like homeownership is out of reach for anyone who isn’t rich.
TikTok creators often push this idea, but it’s misleading. It’s true that houses are more expensive right now. But there are also many programs out there to help first-time buyers.
“This myth is everywhere: The market is too hot, homes are too expensive, and unless you’re swimming in money, there’s no point in trying,” said Hnatkovskyy. “Yes, prices are high, but there are plenty of options out there that don’t involve millionaire status.
“Think outside the box, like looking in up-and-coming neighborhoods or considering fixer-uppers that can be renovated over time. Partner with a good real estate agent who knows how to find deals that fit your budget. Don’t let TikTok’s gloominess stop you from exploring your options.”
Being flexible will get you far. You can find a home that fits your budget, even if it’s not your dream house. Starting small can be a stepping stone to building wealth and eventually upgrading to a bigger property.
Refinancing Will Always Save You Money
Some TikTok videos claim that refinancing your mortgage is a great way to lower your monthly payments.
Refinancing can be helpful in certain situations, but it’s not always the right choice. For one, refinancing comes with closing costs that can run thousands of dollars.
“Refinancing to get a lower interest rate sounds like a no-brainer, right? Well, TikTok might oversimplify things,” said Hnatkovskyy. “While refinancing can reduce your monthly payments, it resets your loan term, meaning you could pay more in interest over time. Plus, refinancing comes with costs — closing fees, appraisals and credit checks — that can eat into your savings.
“Instead, calculate your break-even point and long-term costs before pulling the trigger. Refinancing can be smart, but it’s not a magic money-saver.”
If you can’t break even on those costs, refinancing could end up costing you more than you think. Always do the math before refinancing to see if it makes sense for you.
You Should Wait for Interest Rates To Drop
TikTok creators often suggest waiting for interest rates to drop before buying a home. That might seem logical, but it’s risky.
No one can predict exactly when or if rates will fall. In the meantime, home prices could keep rising. That means that even if interest rates do eventually drop, homes will be more expensive than before.
“Many TikTokers are out here saying, ‘Just wait, rates will drop soon!’ But predicting the market is like predicting the weather — it’s hit or miss,” said Hnatkovskyy. “If you’re in a good financial position now, waiting for rates to drop could mean missing out on your perfect home.
“Instead of trying to time the market, focus on getting a mortgage you can afford today. You can always refinance if rates do drop in the future.”
Even if interest rates are high right now, buying a home could still be a smart move. Mortgage rates can be refinanced later, but the price you paid for the home is locked in. And if you wait for lower rates, it might mean losing out.
Instead, try to find a home that fits your needs and your budget today.
Mortgage Brokers Are a Rip-Off
Some TikTok creators argue that mortgage brokers are unnecessary and just add extra costs.
A mortgage broker compares loan options from multiple lenders and negotiates on your behalf. They’re also there to help you through a complex and overwhelming process.
“There’s this idea floating around that mortgage brokers are just middlemen out to squeeze you for cash,” said Hnatkovskyy. “In reality, a good mortgage broker can save you time and money by finding you better deals than you’d find on your own.
“Yes, they get paid (either by you or the lender), but the value they provide can far outweigh the costs. If you’re unsure, compare a broker’s offer with one directly from the bank to see where you stand.”
Since their success depends on your satisfaction, mortgage brokers are incentivized to find you the best deal. And even though they take a cut, the amount they save you by finding a great rate can more than compensate for it.
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