There are certain common myths surrounding mortgages that you will definitely want to know about if you plan on buying a home at some point. These myths can be quite destructive for those who purchase a home, which is all the more reason to get this information. The last thing you want o do is to make some sort of bad decision because you believed a myth. When you take the time to get this information, you will be able to make the right choices overall.
If you prequalify for a mortgage, you will definitely get the loan
It is 100% a myth that those who prequalify for a mortgage ate absolutely guaranteed to get the loan they want. The truth is that while prequalifying is certainly a good sign, there is still a chance that you will not be approved for the loan. The prequalification process is designed to provide you with an idea of how much you qualify to borrow based on your credit as well as your debt-to-income ratio. This is not a binding agreement, and the lender will most likely need additional documentation before agreeing to give you the loan.
You must have perfect credit to get a home loan
The truth is that you definitely don’t need perfect credit to get a home loan. It is important to keep in mind that the better your credit is, the lower your interest rate is going to be. Credit scores can range from 300 to 850, and anything that is above 670 is generally considered good or great. If the lender is satisfied with your overall situation, you very well may be able to get a long despite not having great credit. It is crucial that you keep this in mind when going forward.
Your mortgage payment should be precisely 28% of your income
Some people may tell you that your monthly mortgage payment should exactly 28% of your income, but this doesn’t have to be the case. The truth is that a simple percentage does not always take into account all of the variable and factors involved in this kind of a financial situation. When determining the monthly mortgage payment that you can afford, you must consider factors like your regular monthly expenses as well as how much debt you already have. Once you have taken these things into consideration, you should be able to make the right decision overall.
You must make a 20% down payment on your new home
While a lot of people choose to make a 20% down payment on their new homes, this doesn’t mean that you have to do the same. The more you put down on your home, the lower your interest rate is going to be. You should definitely try to put down as much as you can on your home loan, but you don’t necessarily have to put 20% or more down. There are even certain lenders who will allow you to put down nothing on your house, but you will end up paying a much higher interest rate.
30 Year Mortgages are the best option
It is a popular myth that 30 year mortgages are the very best option a person has, but the truth is that a shorter mortgage period could be a far better option for a number of reasons. A shorter payback period means a lower interest rate, which is something that everyone wants. If you are interested in paying less on interest throughout the years, you might want to go with a 15-year mortgage.
You will need to be aware of all the popular mortgage myths before getting one yourself. The more factual information you have on this type of loan, the better off you are going to be when all is said and done. Getting a home loan is a very big deal, so you therefore don’t want to have your decision swayed by inaccurate information. Too many people make big mistakes when it comes to getting their first mortgage. In the end you will be glad that you took the time to do this research, as it will be for your benefit.