The Truth About Mortgage Loans: Debunking Common Myths
Mortgage loans help you secure the funds you need to buy the home of your dreams. Unfortunately, there are a lot of myths about these loans. You can learn the truth about mortgage loans with our Altitude Home Loans staff, the home loan experts in Tucson, AZ.
Our team at Altitude Home Loans can answer all your questions about mortgage loans. Please find out more by calling us at 520-500-1010, then reading on to learn the truth about mortgage loans.
Myth #1: You Hurt Your Credit Score When You Shop Around
Generally, repeated inquiries lower your credit score. However, FICO makes exceptions for some inquiries. For example, FICO counts all inquiries of the same type made within a 30-day window as a single inquiry.
Therefore, you can shop around for the best interest rates for your mortgage loan. Just make sure that you do all your checking within the same 30-day period.
Myth #2: You Only Have to Pay the Down Payment Up Front
When you buy a house, you must pay a sizeable down payment in most cases. Some property owners only plan to pay the down payment, counting on their loan to cover the rest of their expenses.
However, in some cases, you’ll face other expenses. For example, most new homeowners need to pay a portion of closing costs. These costs usually come out to around 1-2% of the price for your home. Because homes are so expensive, don’t be surprised if you have to pay thousands of dollars more than you planned.
Myth #3: You Should Always Select a Fixed-Rate Mortgage
For many years, fixed-rate mortgages represented the standard. As a result, most homeowners took out a 30-year mortgage, moved in, and started paying the bank. However, when you consider the truth about mortgage loans, you may find that adjustable-rate mortgages work best in some cases.
In the past, many homeowners avoided adjustable-rate mortgages because the rates could rise, costing them more money. However, these mortgages have rate caps.
In some cases, professionals recommend an adjustable-rate mortgage if you do not plan to stay in your home for a long time. Consider all your options before you purchase real estate and decide which plan suits your needs.
Myth #4: You Have to Put Down a 20% Down Payment
Traditionally, lenders expected new homeowners to provide a 20% down payment. While you could purchase a house with a smaller down payment, it led to higher interest rates and a requirement to purchase Private Mortgage Insurance (PMI).
These days, you can reduce the amount you’ll pay for a down payment by considering alternate lenders. For example, certain government agencies offer loans for a down payment as low as 3.5%. Considering these options can make it easier to purchase a home without making a large lump-sum payment.
Learn More Facts About Mortgage Loans
Our team at Altitude Home Loans can help you learn the truth about mortgage loans. Learn more about refinancing your home or purchasing a new home by calling us today at 520-500-1010. We’ll help you cut through the myths surrounding mortgage loans until only the truth remains.