Myths Concerning Applying For A Mortgage

Posted on: 13 November 2017

Getting a mortgage for your property is a major financial decision to make, but it can be essential for allowing you to purchase the real estate or to finance making major improvements to it. If you are to make sound and prudent financial decisions when it comes to this type of loan, you will need to have a solid understanding of the realities about a few of the myths that individuals will have about mortgages.

Myth: Your Free Credit Report Will Include All The Factors Considered By Lenders

One of the first steps in obtaining a mortgage will be to review your credit history. This is important to help you determine whether there are errors in the report that need to be corrected as well as giving you a basic understanding of your overall creditworthiness. However, you should be mindful of the fact that lenders will often have access to a much more complete picture of your financial situation.

Myth: You Will Always Be Able To Refinance A Mortgage With A Balloon Payment

There are many different ways to structure mortgage repayments. A common option is for individuals to choose a plan that has relatively low monthly payments with a balloon payment due at the end of the mortgage's term. Individuals will often take out this type of mortgage due to a belief that it will be easy to refinance the balloon payment. Unfortunately, there can be many instances where this will not be the case, and you may be forced to make this payment. For example, if your credit worthiness changes substantially, you may be unable to qualify for a loan that is large enough to refinance the mortgage. Additionally, it could be possible for the credit markets to deteriorate to the point where it is extremely difficult to be approved. By better understanding these potential disadvantages of a mortgage with a balloon payment, you can evaluate whether it will meet your financial needs.

Myth: Traditional Banks Are The Only Institutions That Underwrite Large Mortgages

Another commonly held assumption about obtaining a mortgage is that only large traditional banks will underwrite these loans. While it is common for larger banks to underwrite these loans, there are many lenders that specialize in providing mortgages to their clients. Often, lenders that specialize in only underwriting mortgages will have easier requirements for applicants as they may have better internal mechanisms for evaluating a person's ability to pay for their housing.

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First Time Home Buyer? You Need a Real Estate Attorney

When I was finally ready to purchase my first home, all of my friends were still renters, so I didn't get a lot of advice about the buying process. I knew I needed a good agent, and I found a great one who helped me get a really great deal on my starter home. However, I didn't consult with a real estate attorney before I bought the house, who would have found out that the home had a lien on it that I would be liable to pay. Thankfully, it was small, and with the cost of my new house ending up being a great deal and under my budget, I just sucked it up and paid it. I got lucky, but I am still grateful it wasn't a huge lien. I hope someone else learns from my mistake, and I hope everyone enjoys my blog posts!

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