By David Godin, Mortgage Loan Officer
When it comes to financing a home, there are hundreds of misconceptions floating around. Here are four of the most common misconceptions…debunked.
1. Getting Qualified for a Mortgage is Difficult
Loan requirements have three things in common: income, assets and credit. It is like a three-legged stool – if you are missing one of the legs, it doesn’t work. A good credit score will help because it is a reflection of your debt history. Remember to keep large purchases at a minimum while you are trying to obtain a mortgage loan. Making too many big purchases at once can make you look risky to a lender. In regards to credit, you will need a minimum of 60-days worth of statements that will be reviewed during the loan application process. Getting qualified for a mortgage isn’t difficult, a lender will just need to review your income, assets and credit history before formally processing and approving your loan.
2. You Need a 20% Down Payment
While it is not required to put 20% down payment on a home, there are some drawbacks to putting down less. If you put down less than 20%, you will most likely be charged additional fees, and will be required to purchase private mortgage insurance (PMI). Learn more about the pros and cons of PMI here.
Down payment assistance programs are also available, making it cost less in some cases than a security deposit and first month’s rent. For the same amount of money, you may be able to own a home instead of rent an apartment. Ask your mortgage professional what is best for you.
3. I See Their Ads…They Must be Good
Advertisements like commercials, billboards, mobile ads, social media ads, sponsorships and more all cost something. All of that advertising is paid for with things like increased interest rates and high closing costs. Just because you see more of a company’s branding and messaging doesn’t necessarily mean they are better, it could just mean you will be paying more.
4. Shopping Lenders Can Hurt Your Credit
This is a common myth designed to prevent shoppers from finding better deals at competing companies. The truth is, you have up to 30 days for other lenders to review the original credit score pulled, so feel free to shop around for the best rate you can find.
There are hundreds of misconceptions, so if you are unsure about something, it’s always best to do your research or contact Michigan First Mortgage for more information.