That's a lovely picture. A Phoenix, a mythical bird that rises from the ashes of it's predecessor, a symbol of new life. Today we are going to discuss mortgage myths, notions that seem to take on new life that keep people from acting on their desire to purchase a home.
MYTH #1
I have to save 20% for a down payment.
FALSE
I am not exactly sure why this statement is still pervasive, but many people still believe that your grandmother's down payment still goes. The fact of the matter is that a 3.5% down payment can get the job done or in the case of two types of government loans, USDA and VA, there is no down payment requirement. Conventional lending at this time requires 5% down although Fannie Mae is bringing back a 3% down product that was discontinued last year. So forget the 20%.
vampymeodeviantart.com
References to the dreaded Jackalope go as far back as the Aztec Empire, this creature is reputed to be highly dangerous though jackalope milk is rumored to have extraordinary medicinal properties.
MYTH #2
I have to have excellent credit to be approved for a mortgage loan.
FALSE
While some could argue that having excellent credit does take on extraordinary properties, outstanding credit is not required to obtain a loan approval. FHA,VA and USDA will loan on credit scores down to 580. This is not a guarantee that if your credit score is a 580, you will have a loan, but it does mean that we would be happy to consult with you and assess your complete financial picture to see if you would fit in the criteria required to be successful. Given that we are a mortgage broker we have access to a lender that does excellent work with credit in the 580-639 range.
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Who doesn't love Pegasus, the horse of the Greek Gods? Pegasus brings us to:
MYTH #3
My bank turned me down for a mortgage so I won't be able to buy a house.
Under no circumstances accept your bank's word as the last word as to whether or not you will be able to obtain a home loan. Many banks are very conservative organizations and have lending rules in place that exceed the rules required by loan programs. A bank typically has one source of funding so whatever the rules are for that investor, so goes the thumbs up or down process. A mortgage broker such as Tippecanoe Mortgage has several difference sources of money. We choose our sources based upon different specialties, so given more choices, there are more chances for success. Your bank is not the last word.
The griffin is a beast comprised of the king of beasts, the lion and the king of birds, the eagle. Often the symbol of royalty can be seen on the family crests and shields of Kings and universities for some reason.
MYTH #4
I must be at my job for two years before I can qualify for a mortgage.
FALSE
Each situation is unique, but different lenders and different loan programs have different criteria. Often 30 days is enough if all probationary period requirements are met and the work was preceded by training or education in that field or prior experience in that line of work.
Disney.com
Heroes from Gilgamesh to St. George have battled this mythical creature and it still crops up in modern literature in no less popular a series of books than Harry Potter. The blood of the dragon is said to render invincible those who bathe in it.
MYTH #5
A mortgage broker charges their clients more than a bank.
FALSE
The fees a mortgage broker charges are regulated by the Federal Government under the Dodd/Frank Financial Reform Act, the same as a bank's. I find that on most occasions when I am competing with a bank for a loan my fees are less. I still see articles around that state that the consumer has to beware of "junk" fees, i.e. fees that are thrown in that add to the broker's bottom line. It might be instructive to note that we are required to submit invoices for all fees that are charged, and we can charge no fees that aren't for third party services. This old myth can die with a stake in its heart.
The Metropolitan Museum of Art
Last but not least, who could forget the unicorn the most beloved of mythical beasts, appearing on the royal coat of arms of Scotland it is considered a symbol of purity.
MYTH #6
Mortgage Brokers Charge Higher Interest Rates.
FALSE
We have dispensed with the fact that mortgage brokers charge higher fees so mortgage brokers must charge higher rates? Right? Nope. Interest rates are competitive with comparable loans from other lending sources. In many cases our rates are better as we have more than one source of money at our disposal.
These six myths are some of the most common reasons why consumers may be hesitant to purchase a home or choose a mortgage broker as their lender. And like my mythical beasts, the stories are old and pass as conventional wisdom. But they are simply not true. Be sure you know the facts of your situation before you decide you are unable to buy a home. Rates are great, and prices are reasonable. Now is a terrific time to buy.
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