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Mortgage Misconceptions

For most Americans, the home buying process occurs about every five to seven years. Therefore, most prospective home buyers don't spend a lot of time educating themselves about mortgages and the mortgage process. Buying a home can be a stressful experience but the more you know, the smoother the transaction is likely go.

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The True Cost of Your Mortgage Is Reflected In Your Interest Rate

Actually, the true cost of your mortgage is reflected in your annual percentage rate (APR). It is a comprehensive figure of your interest rate, points, mortgage insurance (if applicable) and other fees, including origination. It does not include the cost of your homeowners insurance policy. The APR typically is higher than your interest rate because it incorporates the rate plus the fees.

Mortgage Rates Are Only Released Once Per Day

Rates change throughout the day. Because of rapid changes, listen to your loan officer's advice as they usually have a good feel for certain trends in the market. When they recommend locking in a rate, you might want to act fast before pricing changes.

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Wherever You Do Your Banking Will Get You the Best Rates or Deals

It's highly unlikely that your bank will offer the best interest rates simply because you bank there. The best way to get competitive mortgage rate-and-term quotes are to talk to a few lenders and find the best value for your situation. RANLife supports over 40 different loan programs. We have something that will work for you!

Lenders Will Only Look At One Credit Score When Determining Eligibility

In getting pre-qualified for a mortgage a lender will pull your credit score from each of the three major credit bureaus: Experian, Equifax, and Transunion. From there they take the mid score (middle of all three bureau scores) to determine your credit worthiness. The lower the FICO score, the higher the rate or fees you may be charged.

You Can't Get a Home Loan with Less Than Five Percent Down

This is one of the most common misconceptions. It's often thought that 5, 10, or even 20 percent down is required but Federal Housing Administration (FHA) loans can be obtained with as little as 3.5% down. Qualified borrowers can get a conventional loan (FannieMae/FreddieMac) with as little as 3% down.

There are also government sponsored programs such as the USDA Rural Housing program or the VA that eligible buyers may qualify for. Both of these options require no down payment.

If you have a question about whether you can qualify for a USDA or VA loan, please contact one of our licensed loan officers today.

A Short Sale or Foreclosure Means You Can't Buy Again For Seven Years

More often than not, you can purchase between two to four years removed from a short sale. Unfortunately a foreclosure is a little longer, more likely around three to seven years before getting another home loan. The important thing to remember is that you will need a good credit score so start rebuilding right away. Position yourself to be ready to buy when the waiting period expires.

If You Are Underwater on Your Mortgage You Cannot Refinance

There are a few really good programs that underwater homeowners can use to refinance. The best way to know what you qualify for is to contact a licensed representative and have them run an automated value model (AVM) of your property. Often times homeowners that are underwater can refinance with limited out of pocket costs while still lowering their rate.

Contact a licensed representative about refinancing today.

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