28 Sep Most Common Mortgage Myths Unraveled
At City Creek Mortgage, our professional team takes the time to get to know our friends and neighbors. We listen to your questions and provide you with facts based on our training and experience.
There are many myths surrounding mortgages, and it’s unfortunate because these myths may scare some people away from even attempting homeownership.
Knowledge is power! Don’t be afraid to ask us questions! We can get through the weeds together.
I can’t afford to purchase a home.
If you’re paying monthly rent, it is very likely you can afford to purchase a home. It may take some planning and a little saving, but talking about it now can get you in a house later!
Reach out, and let’s talk about how much home you can afford. You may be surprised at what you’re able to borrow and how much you would need for a down payment. Remember, you never know until you ask. If homeownership is a goal, let’s work toward it together.
My credit has to be perfect to qualify for a mortgage.
If we waited for perfect credit, no one would be a homeowner. Although it is a significant factor in your ability to get a loan, your credit doesn’t have to be perfect.
At City Creek Mortgage, we walk you through the homeownership process step by step. If your credit score isn’t where you’d like it to be, we can talk about improving it. Together, we put goals in place so that you can see short- and long-term success.
Credit is essential, but it doesn’t have to be perfect.
I have to have 20% of the home’s purchase price for a deposit before I can even try to buy.
Well, that depends. Having 20% as a down payment is ideal; that’s true. However, there are several programs available to borrowers who can’t afford such a large down payment. Almost 80% of first-time homebuyers make down payments less than 20% of the home’s purchase price.
There are some mortgage products available to the public that allow for low down payments. For example, government-backed FHA loans only require 3.5% down. VA loans are available to qualified service members and veterans with no money down at all.
An in-depth look at programs that may match your circumstances is worth a look. You never know what you might find until we try.
The lowest interest rate is always the best option.
When you’re purchasing a home, low interest rates are important – for sure! However, the interest rate isn’t the only thing that you should consider.
The interest rate is the percentage you’ll be charged for borrowing the money. This number doesn’t include lots of other fees you may be required to pay the lender for the loan – origination fees, closing fees, financing charges, even documentation fees.
The APR, or annual percentage rate, is a much more comprehensive idea of how much you’ll pay when you borrow money for a mortgage. This is the total cost of borrowing money in terms of a rate. This number includes the cost of interest plus those additional fees. The best depiction of your loan terms and fees will come with the official loan estimate, so the APR is a good comparison tool.
I can’t pay my mortgage off early.
Lenders indeed make money on loans when you pay interest on the principal you’ve borrowed. The longer you make payments, the more the lender makes in interest. If you pay off your loan sooner than expected, your lender is “short-changed” on the amount of interest.
Prepayment penalties aren’t as common as they used to be. It’s worth being aware of the possibility of a penalty so that you can ask questions about early payoff before you sign. Still, many lenders offer loans with no prepayment penalty at all.
The more you know, the more confident you are and the more you have to your advantage.
Don’t let myths and intimidation scare you out of buying a home. Our family-owned and local business understands the prospect of homeownership can be scary and anxiety-inducing. There’s nothing we can’t handle together.
At City Creek Mortgage, our team of professionals works hard to make sure you are comfortable, educated on the process, and understand what’s required to have a successful (and stress-free) home mortgage.
Our team will work with you to get a mortgage you can feel good about. There is a reason City Creek Mortgage is known as the most trusted, respected, and loved mortgage company in Utah.
We’ve got the time – and you do, too – to make sure you feel good about your purchase.