Navigating the world of mortgages can feel daunting, especially with so much misinformation floating around. Understanding the truth about common mortgage myths can save you time, money, and stress. Join us as we debunk some of the most common mortgage myths and provide you with the facts you need to make informed decisions on your path to homeownership.
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MYTH #1
You Need A 20% Down Payment To Get A Loan.
FACT – While a 20% down payment can help you avoid private mortgage insurance (PMI), there are many loan types that have a lower minimum down payment. For example, FHA loans allow as little as 3.5% down. Because of this, many more people can achieve the dream of homeownership earlier in life.
MYTH #2
You Need A Perfect Credit Score.
FACT – The higher your credit score, the better your interest rate could be. However, there are loan programs available to those buyers with lower credit scores. For example, FHA accepts credit scores as low as 580. Keep in mind that lenders may have their own requirements for minimum credit scores.
MYTH #3
Pre-Qualification And Pre-Approval Are The Same Thing.
FACT – A pre-qualification takes a more shallow approach when looking at your finances. You are only required to provide your debt, income and assets. From this information, the lender can tell you if you qualify and how much you might be able to borrow. A pre-approval, however, is a thorough and accurate look at your financial situation. The information submitted is verified and detailed enough to tell the lender exactly how much of a loan you can afford.
MYTH #4
Self-Employed Individuals Cannot Get A Mortgage.
FACT – FBC Mortgage and other lenders offer programs that accept self-employed income. While you might need to provide additional documentation such as tax returns and profit-and-loss statements, just know that it is possible to qualify for a mortgage. One common program is the Bank Statement Loan, which gives approval based on the 12-month average of your business-related deposits.
MYTH #5
Credit Inquiries Hurt Your Score.
FACT – Inquiries alone do not make a big enough change in your credit score to make a difference when it comes to lenders. However, your lender may ask you about the inquiry to determine if a new line of credit was opened. Learn more common credit score myths and facts in our Nine Credit Score Myths blog.
MYTH #6
The Interest Rate Is The Only Cost Of A Mortgage.
FACT – Besides the interest rate, there are other costs that go into your mortgage purchase, like origination fees, title fees, closing costs, and points. The Annual Percentage Rate (APR) identifies the annual cost of your loan, expressed as a percentage. When comparing mortgage options, it’s a good idea to understand the total cost of your loan.
Now that you know the truth about common mortgage myths, continue learning more about Mortgage Basics and Home Ownership on our Mortgage Resources page! Ready to start your homebuying process? Contact Us to get in touch with one of our mortgage professionals today!
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Why Choose FBC Mortgage?
FBC Mortgage, LLC is a leader in helping home buyers with fast and simple loans. We’re dedicated to exceptional customer service and are always available when you need us most, even at night and on the weekend. We’ll help you navigate your new home purchase, and keep you updated along the way with weekly check ins, so you know you’re taken care of. That’s one of the many reasons why 95% of our clients would recommend us to their friends and family. It’s also why the nation’s top home builders and Realtors trust FBC to help their new home buyers.
Buying a home is one of the most important financial decisions you will make. Understanding mortgages and the home buying process can help make it less stressful, and so can partnering with a mortgage lender you can trust. At FBC Mortgage, LLC, we’re dedicated to helping home buyers finance their dream home.
All information presented is for educational purposes only and not intended as financial advice. FBC Mortgage, LLC is a national mortgage lender headquartered in Orlando, Florida. Specializing in residential mortgage lending, including purchase, refinance, construction, and renovation loans. See what our clients have to say. NMLS#152859 EHL ©2024.
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