Facts or Myths about Mortgage Financing

  • facts or myths“It’s impossible to get low down payment loans.”MYTH! FHA down payments are as low as 3.5% for a credit score of 580 or higher. USDA may have 0% down options available in some areas. FNMA has 3% down payment options. Freddie Mac has the Home Possible Advantage program at 3% if your credit score is 660 or better. Also there may be options in your area for down payment assistance through non-profits, government programs or local charities.
  • “It takes perfect credit to get a loan.”MYTH! There is a relationship with lenders where having a good or better credit score can get you better rates but by reviewing your credit report you may be able to clear up some items or get them corrected or cleared. Only by talking with a reliable lender will you know for sure.
  • “If I’ve had a bankruptcy or foreclosure, I can’t qualify.”MYTH! After declaring a bankruptcy or foreclosure, your credit history is very important and you may have extenuating circumstances. Again, a consultation with a reliable lender can help you figure out where you stand and allow you to qualify for mortgage financing.
  • “Getting pre-approved is expensive.”MTYH! In most cases, the only expense with getting pre-approved is the cost of a credit report. Prices vary by lender but are usually around $35. The bonus is you will know exactly how much house you can buy because the lender will give you an amount.
  • “I should wait to qualify until I find a home.”MYTH! In fact, don’t wait. The qualification process can take weeks especially if you have credit issues. Start the process now so when you begin looking for a home you have an ace in your hand with sellers. They will see you as a more serious buyer.
  • “All lenders are the same.”MYTH! Simply put, No they are not. A reliable lender will go over the lending process with you, give you an upfront quote on fees, lay out competitive products available based on your credit, get you lock on the lowest rate possible and do what is necessary to get your loan approved.
  • “Adjustable Rate Mortgages are more expensive than fixed rate mortgages.”MYTH! After a quick review of Bankrate.com looking at rates for Fairfax Virginia the 5/1 ARM is 3.5%. With this product the rates stays fixed for 5 years and then is adjusted annually afterward. If you will be in a home less than 5 years than a product like this might be a good option. The rate for a 30-year fixed is 4.21%. Again there are several ARM choices and working with a reliable lender you will be able to determine which choice is best for you.

As a buyer or a seller, you need solid information to make a good decision. Call us with your questions or to get a recommendation of a reliable lender who can give you the real facts.

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