Sep 27, 2017

Having your own house is what everyone dreams about. And though it is a luxury, we are ready to go to any stretch to transform this dream into a reality. Considering most of us are not blessed with an inherited fortune—a mortgage is often the option that we turn towards when it comes to owning our own home.

Unfortunately, the lack of knowledge and myths surrounding mortgage options is now such a proverbial theme that those who commit are later to be found regretting the decision, while others just don’t commit to it at all.

It is necessary to understand what these myths are, so that people see that there are options for those who are reserved about the subject but also help the applicants with their process.

Undermining the Monthly Payments

Many of the applicants who are looking for a mortgage loan tend to base their decisions on the principal and the interest involved. They design their budget accordingly, only to find out later that these are not the only two factors that determine monthly payments on a mortgage. You also have to factor in the insurance and taxes, and the four together, is what actually determine your monthly payment.

Stereotypes

There is an established stereotype in society that mortgages spanning over the 30 year period, are the best ones. They are considered safe, economical, and affordable. However, with times, the trends change and so do our requirements. Something which was deemed the best solution years ago may not be the best option now.  

According to a survey in 2015, Americans today are more likely to change their home after every 7 years; we have become more nomadic than we used to be.  If you fall into the category of people who do not want to spend the rest of their lives at one place, than going for a 30 year mortgage with fixed interest rate is not the ideal option. In these situations, it would be better to opt for an adjustable rate mortgages (ARMs).

Down payments Scare!

People who want to own a home often tend to avoid mortgages simply because they believe that they do not have enough finances to meet the minimal down payment requirement which is speculated to be 10 to 20 percent of the value. As a result, they spend rest of their lives in a rented home or wait for their luck to change.

Only if they knew that this speculated figure is nothing but a myth. Yes, some loan providers would ask you for 10 to 20 percent in down payment but there are other alternatives that may suit your budget. For instance mortgages backed by FHA only require 3.5 percent as a down payment of the total value of the property. Similarly, there are other programs offered through different local and state organizations that require low down payments.

FHA Myths

People who are not new to mortgage financing with beliefs regarding FHA that are nothing but myths and may stop them from getting the best deal for themselves:

  • For starters, they think that FHA is a mortgage loan designed for people who are exercising the mortgage option for the first time. This is absolutely not true. It is just like any other mortgage loan, but with a lower down payment.
  • Since the down payment requirements for FHA are low, it is only designed for people who are struggling with their finances. Again this is not true.

Mortgages may appear intimidating simply because of the jargon and myths that they come with. But with some research, they could be your golden ticket towards achieving that dream of yours. 

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