Financing your home is probably one of the biggest decisions you will ever take in your life. That being said, if you’re a first-time buyer, then you most probably aren’t aware of the mortgages myths and truths.
Well, in this article, we have you all sorted out. We are going to list for you the top 6 mortgage myths and truths you must know of.
Here they are:
6 Mortgage Myths and Truths
- You will not be able to get a mortgage if you have a bad credit rating
According to a mortgage company in Dallas, “A bad credit score can minimize the chances of you getting a good home mortgage loan. But, what most people don’t know is that bad credit history does not make it entirely impossible to get a mortgage!”
There are various lenders who offer mortgages to borrowers who have a bad credit history.
Also, there are various mortgage lenders out there who will provide mortgage loans to borrowers having credit scores lying between 600 and 650. And, if you don’t have an impressive credit score yourself, you can always get help from Imperfect Credit Programs that help you improve your credit score.
- Self-employed individuals will not be able to get a mortgage loan
This is another myth.
It is true that mortgage lenders might feel at risk by lending mortgage loans to people who don’t have a standard 9-5 job with payslips of several months. This is because such individuals might not be easy to work with, due to their complex incomes.
But, this does not mean self-employed individuals will never be able to get a mortgage loan for themselves.
Pre-qualified and pre-approval is the same thing
For new buyers, pre-qualified and pre-approval mortgages might sound like the same thing, but they aren’t.
In order to get pre-qualified, you will have to provide your loan officer with basic financial information, after which, you will be given an estimate of how much you can actually borrow. Now, getting pre-approved is a lengthy process, and will require the lender to collect and verify all the financial and personal information, as well as get it approved by the underwriter.
- All your upfront costs will be covered by the down payment
This is not true. Along with the down payment, you will also have to cover other costs, including closing costs, fees, and various other costs. All of this can affect your ability to afford a home.
- A lower interest rate means a cheaper mortgage
Who doesn’t want a lower interest rate? Well, this does not mean your mortgages will be any cheaper with a lower interest rate.
How much you are going to be paying off your monthly mortgages payments will have various other factors. For instance, a tracker mortgages can increase anytime, and you will have various other fees to pay as well, which can ultimately increase the cost of the mortgages
- All mortgage companies charge the same
Most people think that all mortgage companies charge the same, which is not true at all.
Each mortgage company has different types of mortgage to offer, including different interest rates, fees, closing costs, down payments, and so on. Hence, it is imperative to thoroughly research before choosing a specific mortgage.