Four mortgage misunderstandings explained
By z4027672030, Feb 10 2016 11:04AM
Dealing with mortgages and conveyancing can be a minefield if you’re not in the know, and it can be awkward to get your head around if you don’t know the ins and outs. Nevertheless, Taylors Solicitors are on hand to help. We’ve picked out four mortgage misunderstandings that are common place in the world of mortgage-based issues and explained them for you.
Take a look at the following points below and hopefully they can help you in the future:
Home loans are available with less than a 5% down payment
This is quite a common misconception that you need to put down a 10, 15, or even 20% on a house. It’s certainly possible to put down as little as 3.5% and still, quite often, be able to obtain a mortgage via the Federal Housing Administration (FHA).
FHA loans have become an established loan option for people who mightn’t have a large down payment behind them or have previous blotches in their credit history. The FHA loans are available to everyone; they aren’t reserved purely for first-time home buyers.
Defining credit reports equally if applying with a spouse
When applying for a joint mortgage, lenders will pull your credit scores using the resources of each of the three major credit reporting agencies: Equifax, Experian, and TransUnion. The middle score is then taken from each set and they’ll use the lower of the two to aid in them determining your mortgage interest rate. This means that the borrower who is least creditworthy will have the largest consequence on your monthly payment. It matters not who the primary or secondary borrowers are.
Interest rates are a reflection of the true cost of your mortgage
The annual percentage rate (APR) you have is in fact the figure that denotes the real cost of your mortgage. Your APR is inclusive of your interest rate, mortgage insurance (when applicable), points and other fees, such as underwriting fees and origination. It doesn’t contain the cost of your homeowner’s insurance policy. The APR is, as a rule, higher than your interest rate as it combines the rate and the fees as one. It’s worth noting that, when looking for a mortgage, it’s advisable to compare possible loans based on APR as opposed to the interest rate, as it gives you a clearer idea of the total cost over the span of the loan.
Best interest rates come from the bank you use
The long and the short of this is, no. However, we’ll divulge. There are some banks who will give their customers discounts, although it is unlikely your bank will be the lender to offer you the best interest rate available purely because you bank there. If you want to obtain competitive mortgage rates and terms, you should take a look at quotes from multiple lenders, again, a service our independent advisors can assist with. And you never know, your bank could have the best offer.
If you would like any more help in regards to property conveyancing firms North Devon, why not contact our expert team today?