Myths About Mortgages

So, you’re thinking about buying a home, but now what? You most likely have so many questions, such as what do I need to put down, can I get a loan, how long does it take? A few weeks ago, the ULR team sat down with Chad Helmcamp of Legacy Mutual Mortgage to get the nitty gritty of mortgage lending and put together a quick start guide for you, the buyer. Some of the most common myths about mortgages are busted below.

Absolutely! The 3 main types of loans are Conventional, FHA & VA. The minimum down payment requirements for these options range from 0% for VA, 3.5% for FHA and 5% for Conventional.

Certainly! Lenders need to see proof of stable employment for 2 tax reporting cycles (2 tax returns.) Make sure you don’t claim so many deductions that it looks as if you have no income, though. 

Most likely, yes! A loan officer can review your entire financial portfolio and with a larger down payment, good income, or substantial assets, you will soon be on your way to becoming a homeowner.

Your Realtor is actually asking that your lender provide a Pre-Approval letter showing how much house you can afford to buy. This shows sellers that you’re a serious buyer and is often required to schedule showings. Additionally, if you’re unsure of how much you want or can afford, this letter really helps to narrow it down. A pre-approval letter is provided after an application for a loan has been submitted and you have supplied all income and asset documents to the lender (before you enter a contract on a home.)

Actually, closing costs are also due at the closing table before you can have keys to your new home. These are fees incurred by the seller and buyer during the process of selling and buying a home such as appraisal, loan origination, title insurance, property taxes, home owner’s insurance and a few others. 

An Adjustable Rate Mortgage is a loan with a mortgage rate that fluctuates. These are often cheaper upfront, but later may become more expensive. If you don’t plan to own your home for more than 5 to 7 years, this may be a good option for you.

With a Fixed-Rate Mortgage, you lock in a rate for the life of the loan; 15 or 30 years. If you plan to own your home for more than 7 years or you really value a good night’s sleep, this is likely the best option for you.

If you’re thinking about buying, myself and Chad are ready to answer all of your questions. When you’re ready, give us a call or send an email. We’ll be here waiting to hold your hand through this exciting phase in your life!