01 Nov Common Mortgage Misconceptions
With so many details and pieces of information constantly flowing in the mortgage world, it can be tough to keep up. Staying on top of trends, best business practices and all the ins and outs of a fast-paced industry isn’t always easy.
Enough confusion in large groups of people produces misconceptions, and there are plenty to go around in the mortgage industry. At City Creek Mortgage, it’s our job to spot fake trends or common areas of confusion, and to never let our clients be exposed to these.
In general, though, there are a few frequent myths that pervade the industry. Let’s take a look at a few of these misconceptions and set the record straight.
Most credit scores are expressed using three numbers, which represent three major American credit bureaus: Experian, TransUnion and Equifax. It’s common for people to assume that when a lender looks at your credit score, all they’re looking for is the highest of the three numbers. This is not the case.
In reality, lenders will average your three scores in most cases. For people applying for a mortgage with a co-borrower, it’s even worse – lenders will almost always default to whichever of you has the lower credit score, and lock in your rate using those calculations. Make sure you adjust your credit score expectations accordingly.
There are a couple common misconceptions regarding mortgage rates.
- Fixed rate is always better: Fixed rate mortgages do hold certain significant benefits in many situations, but these don’t cover 100 percent of the possible outcomes. They’re much more common now as lenders are more careful following last decade’s financial collapse, but they’re not the only option. There are situations where adjustable rate loans are preferable, especially in the short term.
- Your quoted rate is always your actual rate: Mortgage rates are tied to daily bond trading, and as such they change every single day. You’ll often be given a rate during the pre-approval process, but there’s a good chance this rate will have changed by the time you’ve actually found a home. It’s important to keep on your lender for updated quotes throughout this process.
Laws prevent lenders and real estate agents from referring customers to each other and profiting via that two-way street, but this doesn’t mean your agent won’t have preferences. Certain lenders might have more experience with your area, and on the flip side, lenders who lack vital skills for a particular locale or type of mortgage can really damage the loan process.
The laws prevent outright collusion here, as we said, but it’s not uncommon for real estate agents to prioritize their purchase offers based on lenders they’re familiar with. Finding a lender with a good reputation locally, such as City Creek Mortgage, can go a long way to getting you the results you desire.
Want to learn more? City Creek Mortgage is a top mortgage company in Utah, with a staff dedicated to serving your every need.