When it comes to buying a house, one of the hardest things to understand can be debts. Since there is a lot of information out there, it’s simple to believe false things. That’s when the help of a professional is most helpful. In this blog, we ask the experts at Essex Mortgage Advisors to bust some of the most common mortgage myths. This will help people who are thinking about buying a home understand things better and feel more confident.
Myth 1: You need to put down 20%
People often think that you need a 20% down payment to get a mortgage. This is not true. You don’t have to put down 20% to escape private mortgage insurance (PMI) and possibly lower your monthly payments. Essex Mortgage Advisors says that there are many loan programmes that require much less down payment—sometimes as little as 3% for standard loans and even 0% for VA and USDA loans.
It’s not true that your credit score has to be perfect
A different common myth is that you can only get a mortgage if your credit is perfect. Even though a higher credit score can help you get a better interest rate, Essex Mortgage Advisors stress that people with less-than-perfect credit can still get a mortgage. For example, FHA loans are made to help people with bad credit buy their own homes. The most important thing is to work with a mortgage advisor who knows what they’re doing and can help you understand your choices and, if necessary, improve your credit score.
Myth 3: Pre-approval and pre-qualification are the same thing
A lot of people who want to buy a house think that the words “pre-qualification” and “pre-approval” mean the same thing. The Essex Mortgage Advisors say there is a big difference between the two, though. Pre-qualification is an initial evaluation based on information you give about yourself that gives you a rough idea of how much you might be able to borrow. On the other hand, pre-approval is a stricter process where the lender checks your financial information and promises to give you a certain amount of money. Pre-approval is more important to sellers and can give you a boost in a hot housing market.
Myth 4: Mortgages with fixed rates are always better than mortgages with adjustable rates
A different false belief is that fixed-rate mortgages are always better than adjustable-rate mortgages (ARMs). Essex Mortgage Advisors say that the type of mortgage that is best for you will depend on your unique situation. People who plan to stay in their home for a long time will benefit from fixed-rate mortgages because the payments are stable and predictable. ARMs, on the other hand, can be helpful for people who plan to move or refinance in the next few years because the interest rates are often lower at the beginning. Talking to a mortgage advisor in Essex can help you figure out which choice fits your plans and goals for your money the best.
Myth 5: The lowest interest rate lender is always the best choice
Even though a cheap interest rate is appealing, Essex Mortgage Advisors warns people not to pick a lender based on this alone. It’s not always true that the lowest rate is the best deal. Costs like points, closing fees, and the terms of the loan are also very important in figuring out if the home is affordable overall. A mortgage advisor can help you see the big picture and weigh the pros and cons of different lenders’ deals, so you can make an informed choice.
Myth 6: If you work for yourself, you can’t get a mortgage
People who are self-employed are often looked at more closely during the mortgage application process. This has led to the myth that it is very hard for them to get a mortgage. Essex Mortgage Advisors bust this myth by saying that self-employed borrowers can get a mortgage, though they may need to show more proof. Lenders usually want to see tax returns, profit and loss statements, and bank accounts as proof of a steady income. Working with a mortgage expert in Essex who has done this before can make the process go more smoothly and improve your chances of being approved.
Myth 7: If the value of your home has gone down, you can’t refinance
It can be smart to refinance your mortgage, but a lot of people think they can’t do it if the value of their home has gone down. Essex Mortgage Advisors make it clear that a drop in home value is not a complete obstacle to refinancing. The Home Affordable Refinance Programme (HARP) was made to help people refinance their homes even if they owe more on them than the home is worth. Some lenders also offer stock loans that can be changed to fit each person’s needs. Talking to a mortgage advisor can help you figure out what refinancing choices you have.
Myth 8: It’s always a good idea to pay off your mortgage early
Essex Mortgage Advisors say that paying off your mortgage early might seem like a smart financial move, but it’s not always the best choice for everyone. You can save money on interest by paying off your mortgage early, but you’ll also have money that you can’t use for other things. Some mortgages also have fees for paying them off early. Talking to a mortgage expert about the pros and cons of each option based on your financial situation and goals is a good idea before making a choice.
Truth 9: You should wait until prices go down before you buy
It’s typically hard to time the market, and waiting for interest rates to drop can cause you to miss out on chances. Essex Mortgage Advisors say that mortgage rates are affected by many things, many of which can’t be predicted. Don’t try to time the market; instead, think about when you’re ready to buy and how stable your finances will be in the long run. No matter what the interest rates are right now, a mortgage expert can help you find a loan that fits your needs.
Myth 10: Mortgage brokers are just extra people in the middle
Some people who want to buy a house think that mortgage brokers add extra costs that aren’t necessary. Essex Mortgage Advisors responds that a mortgage broker can be very helpful, especially for people who are buying a home for the first time or who have complicated financial situations. They can get you better deals on loans than you could find on your own because they have access to many loan products and lenders. Their knowledge can also make the application process go more quickly and easily, which could save you time and money in the long run.
Myth 11: If you have student loan debt, you can’t get a mortgage
A lot of people feel like their student loan debt makes it impossible for them to buy their own home. Essex Mortgage Advisors debunk this myth by saying that having student loan debt can affect your debt-to-income ratio, but it doesn’t mean you can’t get a mortgage. Lenders will look at your income, credit score, and other debts to get a sense of your general financial health. A mortgage expert in Essex can help you figure out what you need and find lenders who will work with you.
Myth 12: Every mortgage broker does the same things
People often think that all mortgage advisors provide the same amount of service, which is not true. Essex Mortgage Advisors stress how important it is to pick an adviser who is knowledgeable, has a lot of experience, knows the local market, and has a history of closing deals. A good mortgage expert will not only help you get the best loan, but they will also walk you through the whole process, from getting pre-approved to closing. They can give you great tips on how to improve your credit, handle your money, and make smart choices.
13. If you get pre-approved, you’re sure to get a loan
Pre-approval is an important part of getting a mortgage, but it doesn’t mean you’ll get the loan. Essex Mortgage Advisors say that getting pre-approved is based on a quick look at your finances. The final approval is based on a more thorough review that includes checking your job, income, and credit history. The final decision could also be affected by changes in your finances or problems with the home you want to buy. This is why it’s important to keep your finances in good shape and not make any big purchases or take on any new bills before the closing.
Myth 14: Government programmes can only help people who are buying their first home
People who are buying their first home often use government-backed mortgage programmes like FHA, VA, and USDA loans, but they’re not just for first-time buyers. Essex Mortgage Advisors say that these programmes are open to qualified buyers whether they are buying their first home or not. A mortgage expert can help you figure out if you meet the requirements for each programme and how to best take advantage of these chances.
15th Myth: The mortgage process is too hard to understand
The mortgage process can be scary, but it doesn’t have to be impossible to understand. Essex Mortgage Advisors stress that you can get through the process with confidence if you get the right help. A mortgage expert who knows what they’re doing will break down each step, explain the terms, and help you figure out what each loan option means. You can make the mortgage process less scary by learning about it and working with a professional who is happy to answer all your questions.
In conclusion
The debt world can be hard to understand, but it doesn’t have to be too much to handle. By busting these common myths, Essex Mortgage Advisors help people who want to buy a home feel more confident and clear. Talking to a mortgage expert in Essex can help you make smart choices and get the best terms for your mortgage, whether you’re a first-time buyer or want to refinance. Remember that correct knowledge and professional help are essential for a smooth home-buying process.
