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.Share