Many people readily swallow any information that relates to the real estate sector without as much as a second thought, causing them to make critical mistakes. The article highlights some common mortgage myths.
When planning to buy a home, you are likely to come across a deluge of information relating to the mortgage process. While some of it is liable to be true, there is plenty of false and misleading information out there.
Here are a few myths that you are likely to come across:
The longer the repayment period, the better
One thing you should bear in mind is that the longer you stretch out the repayment period, the higher the interest that you end up paying. However, on the other hand, the monthly repayment rates are low and affordable, which is what many people love.
Stretching a loan over an extended period allows people with low incomes to afford a house that would otherwise be beyond their abilities. As such, if you can help it, keep your mortgage payment over a shorter period since you end up saving a significant amount of money in the end.
Pre-qualification amounts to a guarantee
Unknown to most people, a pre-qualification is a superficial process that does not guarantee you of anything since it only ascertains your eligibility. A pre-approval, however, is more comprehensive since it delves deep into your financial history, credit score, income level and much more. All the same, some actions can lower or ruin your credit rating before the mortgage closes and ruin the entire process.
All mortgages are the same
From honeymoon loans to construction loans and professional loans, custom mortgages are available to prospective homebuyers. Tailored to specific professions such as medical professional mortgages, these loans target employees working in specific fields.
Unlike other loans products, you are eligible for a discount on the interest rates when you borrow over a certain limit, usually over $250,000. For the best results, make sure to visit a credible lender and get a clear picture of their products.
With so many mortgage myths floating on the market, one should verify the kind of information they receive before acting on it.