Property Manager MA: Mortgage Misconceptions
Your personal circumstances depend on whether you will get a mortgage or not. There are a few mortgage myths which stump a few people. This post takes a look at them and debunks them.
Credit Scores are used for loan approval
In the event that you are applying for a joint mortgage, then it is suggested that the lender will use the highest credit score between you two. However the lenders take your middle score from between each borrower. This means that they will go for the lowest score between the borrowers middle score.
The worse the rating, the more interest you have to pay. This also means that you may end up being rejected for the loan. There may be an exception if the lender notices that you have applied for a jumbo loan. They will then accept your higher score.
Property Manager MA: Quoted Rate is what you will get
The rate you are quoted will change if you do not lock it in already. They tend to fluctuate depending on the trading of mortgage bonds. The locking of the rate only happens if you have given enough information to the lender. You also need updated quotes from your lender throughout the buying process. Do not forget that the loan payment is dependent on the locked rate.
Unless you’re locking in a rate at the moment it’s quoted, that rate quote can change. Rates are tied to daily trading of mortgage bonds, so most lenders’ rates change throughout each day.
Fixed rate mortgages
Borrowers tend to go for 30 year loans as the rate and payment can never change. However this means that the longer period means higher rates. You need to decide how much you can afford and require the loan for. In the event that you decide to keep the home for five years, then you get a five year adjustable rate mortgage which tends to be cheaper. You will also pay less interest and have considerable savings.
Real estate agents don’t care
You can choose any lender you require as federal law prohibits lenders and real estate agents from paying each other to refer customers. However this does not stop real estate agents from suggesting lenders who are local to your area. They do that as they know which ones understand your area well and all the local taxation laws. Non-local lenders tend not to be experienced enough to make any deals.
Mortgage insurance is always required
Usually you have to get mortgage insurance when you put less than 20 percent down for a down payment. However this also means that the costs go up. The only way to avoid this is to get a piggyback mortgage which consists of two mortgages. The first one is capped at 80 percent of the home’s value while the second one provides the balance of what you want to finance.
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