While the mortgage process is generally the same for most home buyers, each person has his or her own experience—own trials, own timeline and own take on feasibility. So be wary when someone shares generalized ideas about the mortgage process they could be myths. I’ve included five myths which we have found some people accept as fact.
If you prequalify for the mortgage, then you get approved for the loan.
The prequalification process involves analyzing basic information to determine if the borrower qualifies by meeting the basic loan requirements. This is not an approval; if you prequalify for a loan it means that it appears you likely will be approved but the only way to approve someone for a mortgage is by thoroughly reviewing the documentation provided to the mortgage banker. So, while a prequalification is a good indication you will be approved for the loan amount, it is not a certainty.
Your credit needs to be perfect
Let’s be honest, if mortgage lenders required perfect credit scores to approve people for mortgages, business would be rough! So, while credit is important, and a higher score does make it easier to qualify for a variety of loan products, a less than perfect score doesn’t necessarily count you out when it comes to being approved for a mortgage. Most mortgage lenders offer a variety of loan products with varying requirements. To find out what is available to you, contact your local Stockton Mortgage Banker.
You have to save a bunch of money for a down payment.
Long gone are the days requiring 20% down on a house. The required amount for the down payment depends on the home loan for which you qualify. There are options for 100% financing, in which no down payment is required and others with down payment requirements as low as 3.5% of the purchase price. To get a better understanding of the cost associated with buying a house, visit our page that outlines steps for first time home buyers and anyone else buying a home.
You can compare mortgages based on the advertised rates.
Advertised interest rates are not offered across the board, you must qualify for those rates. The advertised interest may require a very high credit score, or several fees paid for up front. The best way to shop and compare mortgages is by comparing loan offers from mortgage bankers who have used your information, including your credit score, to determine the rates available to you.
Renting is cheaper than buying a home
It can certainly be said that in the long run renting is more expensive than owning a home and that is because you may get money out of a home you own but cannot ever earn money once you move out of your rental. In more recent years, it is true that even in the short term, renting can be more expensive; meaning, your monthly rent payment would be higher than your monthly mortgage payment. While this isn’t true for every circumstance, it is worth considering, talk to your local Stockton Mortgage banker to learn more about what is available to you!