Getting a mortgage can be a source of one's frustration at times. However, once you know the process, home buyers can set their expectations properly and eliminate some of the problems. Here are some of the common mortgage myths that experts have debunked.
According to Zillow, Highest credit scores is the not always being used by lenders. It is noted that in some cases "lenders take the middle of three credit scores (from Equifax, TransUnion, and Experian) for each borrower, then use the lowest score between both borrowers' middle scores." For example, your "middle score of 780 and your co-borrower had a middle score of 660, most lenders would qualify and approve you using the 660 credit score."
It is also revealed that rates are linked to credit scores. From the example cited above, your 660 credit score is the basis of the rate, which as expected would push your rate up in a significant manner, which also would possibly disqualify you to get the loan.
Another thing that one has to remember in getting a mortgage is the interest rate. Rates change from time to time as well. It is "tied to daily trading of mortgage bonds, so most lenders' rates change throughout each day. "Homebuyers will often be quoted a rate when you're beginning your pre-approval process, but a rate lock runs with a borrower and a property." This means that "until you've found a property to buy, you can't lock your rate."
Speaking of best mortgage rates, Operadornet says mortgage is not just about principal amount and interest. Home buyers have to consider other fees that they need to shoulder in availing the loan. There are certainly applicable fees and closing cost. However, you need to bear in mind that "all charges are negotiable; you may even demand not to pay them if you have excellent credit and a stable income."
When lender says you are getting a lower rate, this lower rate could still be lower in some cases. According to the report, "Buying down your interest rate is an effective way to have a low rate over the long term, in exchange of one-time fees." This might be a reasonable means if you wish to have the loan for several years. However, if you are thinking of having the mortgage refinance in the near future, then it is not a good idea after all.
The truth of the matter is that "the best mortgage rate is relative." It comes with an understanding "your financial situation now and in the foreseeable future."
Do you have other mortgage myth that you would like to share?
