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Top 5 Mortgage Misconception That Wastes Your Money & Time

Posted by techceptionpk_admin on March 24, 2022

Getting a mortgage can be simple or a nightmare. It depends on how much you know about the process. Applying for a mortgage requires a lot of effort, from reconciling your financial records to making sure that your credit score is in good shape. Another thing to add to your to-do list is to keep an eye out for misinformation and bad advice. There are a lot of Mortgage Misconceptions about house loans. It might cost you both time and money if you believe them. We’ve compiled a list of some of the most prevalent misunderstandings and outlined what you need to know.

1- Perfect Credit Score to Get A Mortgage

Don’t stress over your credit scores. Borrowers with weak credit who want to get a mortgage have options. FHA loans, for example, can be obtained by individuals with credit ratings as low as 500. A credit score of 580 to 660 is typical for VA loans, but lenders consider your entire financial situation. USDA loans also demand a lower credit score than conventional loans. Other variables also matter to your mortgage eligibility. Your income, your savings, your debt-to-income ratio, and the size of your down payment will all be considered by lenders.

2- Buying A Home Quickly When Mortgage Rates Go Low

A lot of people rush towards buying homes when mortgage rates get low. Lower rates mean paying less per month or being able to purchase a more expensive home.

However, home prices become higher when mortgage rates go low. You could end yourself overpaying for a property simply because rates are low. Many analysts predict that interest rates will rise 3.7 per cent by the end of 2022.

3- A 20% Of the Home Price Is Needed for Down Payment

A common mortgage misconception is putting down 20% of the home price as a down payment. A bigger down payment is required on a conventional mortgage, which will help you avoid PMI. However, there are other options. An FHA loan that only requires a 3.5% down payment. VA loans and first-time homebuyer loans have a loan-to-value of 100% financing. 

PMI Is Always Needed on Less Than 20% Down payment Is a Mortgage Misconceptions

When you put less than 20% down on a property, private mortgage insurance, which is a lender-risk charge, is needed. In other words, your overall monthly housing costs have increased. You can, however, avoid mortgage insurance if you put down less than 20% on a home.

The most typical way to achieve this is through a piggyback mortgage. It is a combination of the first and second mortgages. The first mortgage is capped at 80% of the home’s value and the second mortgage covers the remaining amount.

4- A Long Term/Fixed Rate Mortgage Is the Best Option

Although long-term mortgages are the most common, they are not the only option. A short-term mortgage can help you save a lot of money on interest. Another choice is an adjustable-rate mortgage that begins with a fixed rate. It then adjusts at certain intervals based on market conditions. Meaning your monthly payment may alter after the initial term.

Following the financial crisis of 2008, more borrowers began to favour 30-year fixed-rate loans. A 30-year fixed loan’s rate and payment will never change. However, the longer the rate remains set, the higher it becomes.

5- Pre-Approval Means Your Loan Will Be Granted

Prequalification for a mortgage calculates your maximum loan amount based on your income and debts. This stage, however, does not create a legally enforceable loan agreement. Before you are fully approved, your lender will want extra documentation.

Regentology Can Help You Avoid Mortgage Misconceptions

There is a lot of mortgage misconceptions and myths surrounding home loans. However, you don’t need to worry about that with us. Regentology will connect you with the right loan officer who will help you find the type of mortgage suitable for you. If you have any queries, contact us and a loan officer will contact you shortly to assist you during the home loan process.

Read Some More Related Blogs :

1- What Are Conventional Mortgage Loans?

2- Everything You Should Know For Selling A Home In Idaho

3- How to find Pre-Foreclosure Homes?

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