Top Five Myths About Mortgage (Busted!)

If you are looking for a home loan I recommend you get your facts straight before going forward with it. Depending on what you know and learn about the process, getting a mortgage can be both breezes as well as a slog.

The lender may use the best credit score

Lenders will look at both your credit scores and histories. If you wish to count your spouse's income, you'll each need to meet the credit score benchmark. If you are ready to apply for the mortgage with your co-borrower then your lender will score between both of you.

For example, if you had a score i.e. middle score of 780 and your co-borrower had a middle score of 660 credit score, then most vendors will look at it and then approve it using a 660 credit score.

There are certain usual exceptions to this lowest-case-credit-score rule. Most notably and the large one is if you have the higher credit score and you are also the higher earner. Then some lenders will allow your higher credit score on the file but this method is mostly concerned or used for jumbo loans usually above $417,000.

The rate you quote the rate you get

Refinancers can often lock a rate when it’s quoted and as long as you’ve given your lender enough information and documentation to work out if you qualify for the quoted rate. Unless you’re locking yourself during a rate at the instant it’s quoted, that rate quote can change. Rates are usually tied to the daily trading of mortgage bonds that we certainly have, so most lenders’ rates change every day.

Rate quotes also accompany an annual percentage rate, also known as APR, which may be a federally required disclosure that shows what your rate would be if all loan fees are incorporated into the speed. This will cause you to think that the annual percentage rate is that the rate you’ll get, but your loan payment will always be supported by your locked rate, and therefore the APR is simply disclosure to assist you to understand fees.

Fixed-rate mortgages are always better

Fixed-rate mortgages are certainly most ordinarily available with 30-year mortgages and 15-year mortgages. With a 15-year, fixed-rate mortgage you'll usually get a lower rate of interest and pay much less interest over the lifetime of your loan that you have, but you will have a significantly higher monthly payment than with a 30-year mortgage.

The main advantage of a fixed-rate loan are many but one of them is that the borrower is shielded from sudden and potentially significant increases in monthly mortgage payments if interest rates rise. Fixed-rate mortgages are easy to know and vary little from lender to lender. To optimize your home financing for the requirements that you have, peg the loan term as close as you can to your expected time horizon in the home.

The best thing about fixed-rate mortgages is that your rate of interest plus thus your monthly repayment will also stay equivalent throughout the agreed term. As a result, it's easier to allow your monthly expenses and stay top of your finances. This suggests it might be an honest idea if you've got a decent monthly budget for the loan or mortgage you have.