Getting your own home to live in for your adult life is the biggest rite of passage in society today. However, homes can be very costly. It’s not as if most people have enough money saved to just go purchase a house. This is where mortgage loans come into play. Mortgages are far and away the most popular way to buy a home. For many people, however, this is a foreign topic. Here are some important facts to know about mortgage loans that might help you.
1: You Do Not Have to Settle
Many people out there are first-time home-buyers, and they might have less than stellar credit, or a job that doesn’t exactly put them in the top 1% of society’s earners, and other factors that make them think they have to settle for any loan. This is not the case, however. You do not have to settle for a mortgage loan. Mortgage lenders compete for your business, and if you’re qualified for a mortgage loan with one company, you better believe you qualify with quite a few. You can exert some power here over your future and compare mortgage loans to see who’s offering you the best plan. You’re never locked into a plan just because you qualify with one place.
2: You Can Put a Mortgage to the Test
Not a lot of people know this about mortgage loans, primarily because the companies aren’t exactly advertising it, but you can seek pre-approvals from multiple companies. This differs from comparing your loans through a resource; this is more about allowing the mortgage lender to sell you on the best plan. Again, they’re competing for your business, not the other way around. This is a dynamic that few people realize. The mortgage companies want your payments and your interest; this is how they profit and stay in business. Put your mortgage option to the test by seeking pre-approval and having the lender explain the benefits to you personally.
3: You Don’t Always Need a Down Payment
So many potential home-buyers believe that they need 20% of the home’s cost up-front that they don’t even start thinking about a mortgage until they have it. This is something that took off via the Mandella Effect. In reality, you might be able to get by with very little putdown. For instance, if you have great credit, you won’t have to put nearly as much down; the average is about 3.5% for something called “97% home loans.” If you’re a member of the VA or any other groups, you might get deals and discounts. You can also get a piggyback mortgage with 10% down. The bottom line is that the 20% standard is a myth. Most people can get a mortgage for less.
4: Fixing Your Credit is Easier Than You Realize
Again, mortgage companies need you to stay in business. They want to lend you money, and so they look for reasons to do it. If you currently have credit that’s too poor for a mortgage, that’s easy to fix. You can go with some consolidation services; some mortgage lenders even recommend them to you. As soon as you consolidate and start paying, the service reports to all three credit bureaus, and your credit score drastically climbs. This makes you a very attractive risk for the mortgage lender because they see that you’re getting everything in order and are serious about getting home.
5: Your Mortgage Doesn’t Need to Include Closing Fees
There are many different benefits to having a mortgage; they’re certainly not all rip-offs to put you into debt. One of the best benefits is that getting a good mortgage and having the money to cover the seller’s asking price might just prompt the seller to pay the closing costs for you. Many sellers don’t view this as losing money. Rather, they view this as getting their money a lot quicker. If they’re handling closing costs, it’s a lot simpler for the mortgage lender to just write them a check for their asking price. Ask the seller or agent about this.
Mortgages certainly are not guaranteed, and some can be pretty dangerous for you to get locked into. Though the more you understand about mortgages, the better off you’re going to be. This is because you will make a smarter choice with more information.