Five Common Myths About Mortgage
One of the most unavoidable things when it comes to buying a home is the application process in mortgage. Though there is an exception to this, especially if you are wealthy and have the capacity of buying your dream home. In addition to this, you can make a full time payment for it. Nevertheless, today there are five common myths or misconceptions about mortgage loans that you should be aware of. This misconception has brought a lot of confusion for many who have planned to own their own home. So, these are some of the myths that you shouldn’t be believing:
The highest credit score will be used by your lender
In this situation, there are two things to consider. The first is, the medium of your three credit scores (from Equifax, TransUnion and Experian) will be used and not the highest. Secondly, you shouldn’t be surprised if your lender uses the lower middle scores among the two when you are buying a home as a co-borrower. For example, you have 720 as the middle, then your co-borrower has a score of 680; in this case, your lender may fix your terms and interest rate on the lower score.
Your quoted rates are the final rates
Unless you have locked your rate, the one you are quoted is just an estimate. You have to look out for your dream home before locking in your rate. This is necessary because rates are constantly changing daily. The rate is connected to the property and the borrower. There is one exception to this and this is when you opt for refinancing. You can lock your rate in the process early by giving your lender sufficient information.
Adjustable-rate loans are less superior when compared to fixed-rate mortgages
Adjustable-rate mortgage (ARM) have stigma attached to them as a result of fluctuation in the interest. Because of safety and stability, many borrowers are given a fixed rate loans. Before making the final decision, you should consider the following questions. What is my plan in staying in this house? Perhaps, your answer is less than five years. Under this situation, an adjustable rate mortgage is better because you have the opportunity of saving more each month. There are a lot of mortgage companies in Montreal that help their clients in choosing which is better.
Real estate agents are impartial in their work with you
Since borrowers are at liberty to choose their preferred lender, lenders can also be recommended by the real estate agents. These real estate agents are more trusted to work and handle various issues that may arise during the process.
No good load without 20% down payment
According to orthodox wisdom, you need to make a down payment of not less than 20 percent to buy a home, but mortgage loans aren’t conventional always. There are a lot of loan options available that may not require a down payment of 20%. Piggyback loan is a sure way in avoiding this issue. A piggyback loan has a first and second mortgage. The first is 80% of the value of the home, which is the 20 % that is paid and the second covers the remaining balance. Before finalizing, ensure you ask your lender of the various options available to you.