A new home is probably the single biggest purchase you will ever make, and you want to get it right. It’s important to do your research during the process, but remember that you can’t believe everything you hear.
You’ve heard of the dos and don’ts, but do you know what’s fact and myth when it comes to mortgages? If you believe you’re saving money by renting or a 30-year fixed rate is always the best choice, you subscribe to mortgage myths that can cost you money.
Myth #1: The Mortgage Term Needs to Be the Term on the Note
Most lenders don’t want to refinance because they don’t want to start all over again with a new loan that’s due for 30 years. Borrowers will also ask you to pay for the closing costs. There are lenders, however, that offer loans without closing costs. While this seems too good to be true, according to CityCreekMortgage.com, it is possible.
Myth #2: A Thirty-Year Fixed is Always the Best Choice
When you think of a mortgage, you automatically think of a 30-year fixed-rate mortgage. This can be your best choice if you’re planning to keep the home for that long. If you plan to keep it for only about five years, a fixed rate for five years can be the better choice.
Myth #3: It’s Better to Rent Than to Pay a Mortgage
So you think renting will save you more money than buying and owning a home. However, it’s actually, usually less expensive to pay a mortgage. When homes are significantly increasing in value and rent across the country is skyrocketing, it’s easy to see which of the two is the better choice.
Myth #4: Obtaining a Mortgage Loan is a Complex Process
Some lenders make the process easy and understandable to everyone, even to first time homebuyers. They will guide you through the entire thing and explain what you need to expect, such as what is in your budget, how much the closing costs are, and how long it will take to close on the loan.
If you want to purchase a home, remember to avoid these myths and follow the one golden rule: read up and proactively increase your knowledge!