3 Common Mortgage Misconceptions

mortgage misconceptions

Buying a home is a fantastic experience though choosing the right mortgage can sometimes be a little tricky. To help you navigate your mortgage more effectively, it is important first to dispel some common misconceptions that can be associated with mortgages.

Your Highest Credit Score Will Determine Your Rate

When you are financing a mortgage with a co-borrower, there is often a misconception that the lender will take the best credit score from one of you and use it to determine the rates. Unfortunately, this is not the case. Lenders will pull all three of each signers credit scores, select the middle score, and use the lower of those two to set your rates. This makes it essential that both borrowers have a decent credit score to ensure the best rate possible.

You Need to Put at Least 10% Down on a Home

Many people believe that getting a mortgage is out of their reach because they do not have a significant down payment to put on the house. The truth is you can find mortgages that require as low as 3.5% for the down payment with an FHA loan. FHA loans also allow for more leeway with credit history allowing more individuals to become homeowners.

Your Interest Rate Will Provide the True Cost of Your Mortgage

The true cost of your mortgage is reflected in the APR which takes into account your interest rate, points, mortgage insurance, origination, underwriting, and other fees associated with the mortgage. If you are looking to find the most accurate cost of your mortgage compares rates by APR instead of interest rates alone.

If you would like more information on the mortgage process, or are in need of a mortgage, lender contact Midland Mortgage Corporation today to speak with an experienced mortgage professional.

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