5 Mortgage Myths
These days there is a lot of chatter about just how low mortgage rates are. This is part of the driving factor behind a busy real estate market as well as the cause for many to refinance their existing mortgage to realize some savings. Among the discussions comes some false or misleading information which should be cleared up. Here are some of the top myths about home mortgages.
Getting a mortgage is simple
With rates so low lenders are extremely busy. Many are looking to take advantage and either buy property or refinance the one they own. With this influx of applicants some lenders are tightening up their requirements. Some lenders are dealing with this by increasing minimum credit scores as well as increasing down payment requirements which may make things more challenging for some.
The historically low rates of today are great news for many, but not for all. Most importantly you need to have a good credit score to qualify. Additional things like the type of home, size of loan and down payment will all play a factor in the rate as well.
Everyone should refinance
Just because loan rates are low doesn’t mean it makes sense for everyone to refinance. Everyone’s situation is different and needs to be looked at carefully. Consider how much of a drop in rate you are looking at and how long you plan on being in the home as refinancing costs can be significant enough to make it not worth it. Also, factor in where you are in your current mortgage term and consider whether it makes sense to start the clock all over again. For anyone approaching retirement in the not too distant future it may make sense to stay on the current course and pay off the home sooner.
You can apply for a mortgage after locating a property
Especially in today’s competitive landscape you will most certainly want to apply for a mortgage first, then go look for a home. Any competing offer that doesn’t have the financial backing will simply be overlooked by sellers. Don’t get your heart set on a property and either lose out or find out for whatever reason that you cannot afford it.
Forbearance means you don’t need to pay back your loan
With the state of affairs occurring this year many have been struggling with financial hardship and by result have been granted mortgage forbearance. What this means is that the lender has more or less granted a time out so to speak for some payments. This doesn’t mean that you don’t still owe the money however. Terms will vary from lender to lender based on what was worked out. Payments may be tacked on at the back end of the loan or shall be paid in an agreed upon period of time.