When you sit down and start to think about the home buying process, it can be overwhelming. There is so much information out there and so many people telling you to do this and avoid that. Buying a new home is an experience you truly will never forget. To ensure it’s a good experience you should pay attention to these top mortgage myths below.
Pre-Qualification Means You Get A Loan
When you go in for your initial visit with your home lending agent they will prescreen you for a pre-qualification amount. This will allow you to know what range you can afford when it comes to a home. You will typically tell your agent and they will show you homes that fall within that range.
Realize that all pre-qualifications are not binding contracts. The lender can retract that qualification at any point in time. Just because you are pre-qualified for a mortgage loan amount doesn’t mean that you will be approved for that amount. Many lenders will require further verification before issuing you a loan.
The 28 Percent Rule
If you haven’t heard of this rule, then consider yourself lucky. Some person or bank came up with this thought that the ideal percentage of your paycheck that should be applied to your mortgage loan is 28 percent. That simply doesn’t work for everyone.
While we don’t encourage anyone to spend over 40 percent of their income on their mortgage alone, the correct percentage is specific to the individual. You know what your other monthly expenses are. You know how much debt you have. Choosing the right amount is person-specific. Choose a number that you are comfortable with, not one that someone else wildly suggests.
You Must Have Perfect Credit To Buy A Home
While having perfect credit can help you to get approved for a larger loan and a better interest rate, it is not a necessity to purchase a home. Those with less-than-perfect credit scores are eligible for home loans. These individuals may have to provide more financial proof and have a low debt-to-income ratio. When trying to get approved for a home loan, you can check with ACE Capital to get answers to your questions.
All Home Loans Are 30 Years
Home loans come with all sorts of different term lengths. Some come with five, ten, fifteen, and twenty. While a thirty-year mortgage is the most commonly used, home buyers can opt for a shorter term. The term of your loan all comes down to what sort of monthly payments you can afford.
Those who are able to pay a higher monthly mortgage premium should opt for a shorter term to avoid paying unnecessary interest. Those who can only afford a small monthly payment will need to opt for the longer term of thirty years.
By understanding these common misconceptions about home mortgages, you can be more knowledgeable about obtaining your own mortgage loan. We highly encourage you to do your research about home buying before speaking with lenders.