5 Common Mortgage Myths: Get the Truth from Cambria Mortgage
The idea of getting a home mortgage loan can be daunting, especially if you’re a first-time homebuyer. The good news is that many long-held beliefs about mortgages are no longer true. Here, the experts at Cambria Mortgage explain some of the most common misconceptions.
Myth #1: You need a 20 percent down payment to get a good loan.
It’s true that the bigger your down payment, the lower your monthly mortgage payment, but you don’t always need to put down 20 percent of the purchase price. The actual down payment, which can vary from zero to 20 percent, depends on your credit history, the type of home loan you qualify for, and the kind of property you’re buying. With new home loan programs designed to make homeownership easier and more affordable, down payments are at their lowest since 2012. With conventional home loans, down payments can be as low as 5 percent. Down payments for FHA loans can be as low as 3.5 percent with mortgage insurance, while VA loans for qualified military personnel don’t require down payments or mortgage insurance.
Myth #2: You should always pay off your mortgage as fast as possible.
While the idea of paying off your mortgage early may be tempting, it’s important to consider other goals and opportunities first. If you have credit card or other debt with interest rates that are higher than your mortgage interest rate, it makes sense to eliminate those debts first. And, because paying off your mortgage early does not increase the equity in your home, it may make sense to invest in home repairs or remodeling projects that will increase the value of your home. If you have equity in your home, you can use it to fund college expenses or invest in a vacation home or other rental property to create additional income.
Myth #3: You need a high credit score to qualify for a mortgage.
It’s true that if you have a high credit score, you’re more likely to qualify for the best mortgage interest rates and terms. But, even if your credit is less than perfect, you may be able to qualify for a loan with competitive rates and terms. By working directly with a local lender such as Cambria Mortgage, you may be able to increase your credit score or offset it with proof of steady work, a history of on-time rent and other payments, and enough savings to cover your expenses. Another option is to have a parent, spouse, or other individual co-sign your home mortgage loan.
Myth #4: Mortgages are the same at every bank.
While it’s true that all banks offer an array of home mortgage options, the loan products, interest rates, closing fees, and other costs can vary significantly from bank to bank. The experts at Cambria Mortgage can help streamline the process by explaining your options and finding the right mortgage with the best possible interest rate and terms.
Myth #5: Owning a home is more expensive than renting.
Many people assume that renting a house, an apartment, or condo is less expensive than owning a home, but when you factor in the tax benefits and the opportunity to earn equity and build wealth over time, home ownership may provide more long-term value. In addition to the potential financial benefits, home ownership may also provide a number of intangible but important benefits, including a sense of pride, satisfaction, and security.
Interested in learning more? Your Cambria Mortgage expert can explain the various home mortgage programs and help you decide which one is best suited to your needs.