You probably have a lot of questions on the whole process of applying for a mortgage. Perhaps you’ve heard some things you’re not too sure about. That’s understandable, I would too if I was you. There’s a lot of information flying around out there.
Here’s a few things that are good to know.
Check out a few of the most frequently asked questions along with some common myths it seems people continue to keep on hearing!
The FAQs
Is it better to get a fixed-rate or an adjustable (ARM) loan?
It really comes down to a number of questions like, how long are you planning to stay in the home, how often will the ARM change, what’s the interest rate currently like and some other things we can discuss together.
Do you recommend getting a 15- or 30-year loan?
The answer comes down to how much money you are comfortable spending each month with your mortgage payment. If you can afford to pay off the home more quickly, you can get a lower interest rate and really save with a 15-year term.
What all goes into my monthly mortgage payment?
In short, lots of stuff. But to summarize for you quickly, you’ve got everything from the principal and interest to taxes and insurance. And then of course, there’s also separate mortgage insurance until you’ve paid off the first 20% of your loan.
What are discount points and are they good for me?
You can put additional money down upfront in exchange for discount points that help reduce your interest rate. If these interest savings are greater over the life of the loan than the price per point paid, it could be a very good move.
Do you think it’s smart to refinance your home?
This really depends on a number of things, like of course, the current interest rate. As well as, other factors like how long you plan to be in the house, and weighing your new reduced payment against the upfront closing costs.
The Myths
You will spend more on a mortgage payment than monthly rent.
|Many find a home they want for the same price or less than they pay in rent. Plus remember, those monthly payments will stay the same over the life of the loan with a fixed rate versus climbing rent prices over the years.
You need exceptional credit to qualify.
Credit certainly plays a factor in the whole process of getting approved for a loan, but that doesn’t mean you’ve got to be perfect. There are plenty of programs out there designed specifically for those whose score might not be an A+.
You usually need around 60 days to close your loan.
We have closed loans in less than 15 business days thanks to the committed team we’ve worked with over the years of appraisers, insurance agents, title companies and a whole host of other folks dedicated to your business.
You take care of your closing costs with the down payment.
Closing costs include things like your credit report and appraisal fees, title insurance and more. A good rule of thumb is to anticipate these costs at about 1-3% of your loan amount.
You should work to pay off your home mortgage first.
Typically, the loan on your home gets secured at a rate that’s much lower than the average personal loan, or credit card debt that gets accrued. However, if it feels like the right thing to do, we can work with you to help get it done.
*You can have different types of scoring models applied on credit checks.
The credit scores presented by (for example) creditKarma or Credit journey are not so-called FICO scores and follow the VantageScore 3.0 consumer credit scoring model. This is not affiliated with Fair, Isaac and Company, “FICO”. As a mortgage broker, I use FICO scores 2, 4 and 5 from Experian, TransUnion and Equifax.
Please let me know if you have any other questions or have come across any other myths in your experience buying home. I’d love to add them to the list!
