If you are looking for a great deal when you purchase a home, you need to find the right mortgage lender. Unfortunately, your research online can lead you to shady misconceptions about what it takes to secure a loan. Like anything found online, it’s best to take these myths with a grain of salt. Remember that not everything online is as accurate and as reliable as they appear to be.
Knowing the truth about your mortgage
Buying a home is a highly complex process, even more so if it’s your first time purchasing a property. Since you’ll be entering the world of mortgages without any prior knowledge about the matter, you could be prone to committing costly mistakes. Unfortunately, reversing real estate mistakes can be a grueling process.
While it’s good practice to do your own research, you must confirm the information you find before assuming it’s true. As you look for the best mortgage plan, here are three problematic mortgage myths you should clear off your mind:
1. You need to have perfect credit
When applying for a loan, your credit score will indicate the accompanying risk factor of taking you in as a borrower. This allows lenders to identify a reliable borrower through their credit history and sources of income. However, it’s not always necessary to have an excellent credit score. In fact, getting anything above 700 should put you in the clear for reasonable interest rates.
Unfortunately, getting a score below 600 can prevent you from getting approval from some mortgage companies. And if a lender accepts your loan application, you may be burdened with high interest rates. Thankfully, numerous government-backed loans and several conventional loans will look past your low credit score. Keep in mind that these options may be generally more expensive.
2. The best deals come with the lowest rates
It can be a relief to get low interest rates, especially if you don’t have the best credit score around. However, that doesn’t mean you should stop your search when you’re offered a low interest rate. Although these companies offer low rates, it doesn’t always point toward greater value in the long term.
For example, they can add origination fees and additional insurance costs that will add up to a more expensive purchase in the long term. Don’t forget that loans are more than just interest rates. Remember to ask questions and confirm contract clauses to avoid falling into these low-interest ploys.
3. All mortgage loans require a 20% down payment
Technically, all loans require some form of upfront down payment. It’s a lender’s assurance that a borrower will be capable of committing to a long-term responsibility of yearly repayments. The 20% down payment is also a requirement to lower your interest rate in the long term. However, it’s not always necessary to pay that amount. In fact, you pay less or more depending on your loan arrangements. It’s all a matter of looking at your options and considering which financial decisions will benefit you in the long run.
Conclusion
Although the internet makes almost all kinds of information accessible, that doesn’t mean that everything you read or see is reliable. For this reason, it’s vital to always cross-reference your sources, no matter what the topic. When it comes to major commitments like mortgages, it’s best to get your information from mortgage experts. Besides giving you an overview of the essentials of finding the right loan, they can also give you strategies and advice on getting the best deal possible.
At Benjamin Group Lending, we understand our client’s need to have a comprehensive set of options for their mortgage plan. Using our training and expertise, we can assist with estate appraisals, loan processing, and more. If you want to work with the best mortgage brokers in California, contact us today!
