The mortgage world can be a complex one, and unfortunately there are times where popular myths can make their way through the industry. At Altius Mortgage Group and our partners at Mortgage Ogden, we’re here to help you avoid these kinds of myths.
So what are they, and what are the real truths about certain home loan misconceptions that make the rounds? Let’s take a look.
A 30-year fixed-rate mortgage is considered by most to be the basic standard for a given mortgage, and in many cases they’ll also be the best option for you. But just because this is the longest loan period and comes with some of the least risk doesn’t necessarily mean it’s right for every situation. With the average time spent living in a new home continuing to drop every year, more and more homebuyers might be attracted to shorter terms or adjustable-rate mortgages – these may be a better option for getting the best mortgage rate, especially if you’ll be flipping the property at some point.
Another common assumption is that you need 20 percent of the home cost to put down up front, or else will be stuck with expensive mortgage insurance. And again, while this is often true, there are many newer programs that help people who are in a tough spot here – FHA loans and piggyback mortgages, just to name a couple.
We all want to pay down our debts as quickly as possible, especially our large ones like a mortgage. But there are times where going too quickly on a mortgage won’t offer you any additional benefit at all – you’ll only be lowering the principal debt in some cases, not actually accruing beneficial equity. If this is the case, you’d be better off investing the money and earning real interest through another avenue, and simply paying your mortgage on time.
Especially among people without a large savings, the automatic assumption is that renting saves money compared to owning a home. This actually isn’t true – in reality, it’s almost always less expensive to pay a mortgage than to rent the same level of home, particularly if you’re handy and can handle certain maintenance bits on your own.
There are several application steps for a mortgage, and pre-qualification is the least formal and binding of them – but some people get it confused with later steps in the process, particularly pre-approval, which is much more official. Pre-qualification is only to get a general idea of the kind of mortgages you’re likely to be approved for, and it’s not intended to be final whatsoever. Never make the mistake of using this as a loan commitment.
To learn more about common loan myths to avoid, or to find out how to get the best mortgage rate for your new home, speak to the brokers at Altius Mortgage group and Mortgage Ogden.