If you’re shopping for a home mortgage, you may be basing some of your critical financial decisions on bad information.
Home buyers often talk to friends and family about the process of applying for and obtaining financing for their new home, but the information they get may be outdated, not applicable to their situation or just plain wrong.
Myth No. 1: Getting Qualified Means Your Home Mortgage Loan Is Approved
Before you begin shopping for a house, your real estate agent will advise you to talk to a home loan specialist to get qualified for a mortgage.
To achieve this goal, you must provide the lender with a variety of documents, typically including pay stubs, bank statements, tax returns, etc. Your lender will pull your credit report, and based on your income, debts and credit scores, calculate how much money you are qualified to borrow for your home purchase.
Although a mortgage qualification tells you how much you can spend on your new house and what type of loan programs you are likely to be approved for, this doesn’t mean your loan is approved.
In fact, you won’t receive a full mortgage loan approval until you’ve chosen a house, entered into a contract for purchase and an appraisal has been completed. The lender needs the full picture — of you and the property you wish to buy — before you receive final loan approval.
Myth No. 2: You Must Have Large Down Payment to Get a Home Mortgage
Another common misconception is that buyers must save up a substantial down payment (like 20 percent) to get a home mortgage loan.
Depending on the loan programs that fit your qualifications, you can purchase a home for as little as 3 percent down — or potentially less. Many home mortgage programs allow your down payment to be gifted by a family member. You can also find zero-down mortgage loan payment assistance programs, grants and zero-interest deferred loans specifically designed to help Utah residents realize their dream of homeownership.
Your lender can tell you about the available programs, and if you qualify, help you choose the one that best suits your needs.
Myth No. 3: The Internet Is the Best Way to Get a Home Mortgage Loan
You’ve likely seen a rash of TV commercials showing enraptured potential buyers getting loan approval while standing on the sidewalk in front of their dream home.
You also probably use the internet to shop for everything from laundry soap to furniture and appliances — so why not a home mortgage?
It’s fine to browse the internet to learn more about the different Utah home loan programs that may be available, or to check current mortgage interest rates. However, stop and think before you click a button and hand over your personal financial information (date of birth, Social Security number, etc.).
Many online lenders are legitimate, but you must be sure what’s being done with your information. If too many potential lenders pull your credit report, it can lower your score. You will also receive dozens of emails, calls, letters and texts from lenders who buy your data from online lending sites.
Talk to a locally owned and operated lender in your area first to learn more about your options. You can always go back later and use an online mortgage site if you decide that’s the best route for you. Just remember that you won’t have that personalized level of service that you get from someone who lives and works within your own community.
In Orem and throughout northern Utah, Intercap Lending assists clients with mortgages, refinance loans, construction and investment financing, HELOCs, reverse mortgages and more. Contact one of our helpful, experienced loan specialists today to learn more about your Utah home mortgage loan options.