It is no secret that the home buying process is a long and complicated one. Getting started can be intimidating and confusing, so we\u2019ve compiled a list of common mortgage myths we hear from our clients. Here, we\u2019ll break them down and explain the truth about mortgages, in plain English.<\/p>\n
Many prospective buyers are hesitant about having their credit pulled because they fear it will destroy their score, but it has far less affect than you\u2019d think. Having your credit pulled for any reason may have an impact on your overall score, but it is usually very minor.<\/p>\n
Did you know, you actually have many different types of credit scores? Depending on who accesses your credit report, from which bureau, and for what purpose, a different scoring model is reported. Mortgage inquiries are treated differently than other credit inquiries because you can shop around for the best rate<\/a> and terms. The credit bureaus do not penalize consumers for rate shopping, so any mortgage inquiries that happen within the same 45 days are treated as only 1 inquiry on your credit report.<\/p>\n Popular sites like Credit Karma and Free Credit Report are great tools for monitoring trends in your credit report, but are simply not reliable sources for determining credit eligibility. We\u2019ve compared Credit Karma\u2019s \u201cscores\u201d to actual scores we\u2019ve pulled, and seen as much as a 100-point swing in either direction\u2014whoa!<\/p>\n Don\u2019t necessarily trust information you obtain from these websites\u2014talk to a mortgage loan officer! In addition to providing you with an accurate credit rating, your loan officer can provide insight into what factors may be affecting your score, and what you can do to improve it.<\/p>\n If you haven\u2019t been in your current job or position for the last two years, don\u2019t worry! As long as you have had continuous employment for the last two years, you\u2019ll still qualify. Any gaps in employment will have to be detailed with a signed letter of explanation, but do not necessarily doom your chances of being pre-approved.<\/p>\n For some unknown reason, many of our clients believe they should have all other debts paid off before buying a home. While this is a noble idea and paying off debt is rarely\u2014if ever\u2014a bad idea, closing revolving accounts will actually do more harm than good! Pay off\u2014or pay down\u2014as many accounts as you can, but do not close out your credit cards. Having unutilized credit positively affects your credit score and your borrowing profile!<\/p>\n It is a common misconception that borrowers must have 20% to put down on any home that they want to purchase\u2014not to mention closing costs\u2014but that simply isn\u2019t true anymore. There are many mortgage programs available today that did not exist a decade ago. For example, the FHA<\/a> now offers mortgages with as little as 3.5% down<\/a>, and both USDA<\/a> and VA<\/a> offer programs with no down payment<\/a> at all!<\/p>\n It is almost always cheaper to pay a mortgage than rent a comparable home in the same area. Owning a home also allows you to build equity. When your lease ends on your apartment, you are welcome to leave, but the rent you paid is long gone. Buying a place of your own allows you to build your own wealth over time, not your landlord\u2019s.<\/p>\n Many borrowers, when thinking of purchasing a home, start with their trusted bank or credit union first. It makes sense, right? They know you, you\u2019ve banked with them for years, they already have all of your personal information, it should be easy peasy, right? Wrong! Loan guidelines are the same for everyone, no matter which bank or lender originates the loan. Your bank won\u2019t be able to cut you any special breaks or give you an extra low rate, just because you\u2019ve been a member for a while\u2014even if they want to!<\/p>\n To apply for a Mortgage or Refinance call Riverbank Finance today at 1-800-555-2098. <\/p> 2. Credit Karma says my score is\u2026<\/h3>\n
3. I haven\u2019t been at my job for 2 years yet<\/h3>\n
4. I need to payoff and close out my credit cards first<\/h3>\n
5. I don\u2019t have the funds for a down payment<\/h3>\n
6. Owning is more expensive than renting<\/h3>\n
7. My bank will give me the best deal<\/h3>\n
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