Have you heard about the Bear Lake Monster? Legend states that it’s a big snake like creature that can swim a mile a minute, lurking deep in the shadows of Bear Lake. Watch out next time you go swimming! It can be really fun to hear about the adventures of Paul Bunyan, Big Foot, or our local Bear Lake Monster, but we all know that myths and folklore aren’t real. The problem is, even though they aren’t true, myths can still influence our opinions and actions.
Recently myths and their magical influence have crept into the realm of mortgages; and I’m not talking about the time the 3 little pigs got a home loan for their brick house. I’m talking about the “mortgage myths” that influence our beliefs about getting a home loan. Have you ever heard “you need a huge down payment to buy a house” or “buying a home requires so much paperwork?” Getting a mortgage for your dream home is much easier than these tall tales make it appear. Let’s debunk some of these mortgage myths.
I Need a Big Down Payment
Back in the day it was almost easier to slay a dragon than provide the 20% down payment required for a home loan. Luckily today's down payments are much more reasonable. Some home loan programs don’t even require a down payment. If you have to provide one, down payments range from as low as *1% down up to **3% of the purchase price. Plus there are grants and other down payment assistance options that can help you cover your down payment requirements.
*1% Down Payment, 30 year fixed rate mortgage, 4.265% annual percentage rate (as of 05/10/2017).
**3% Down Payment, 30 year fixed rate mortgage, 3.948% annual percentage rate (as of 05/10/2017).
I have to dig up a lot of Paperwork
Would you rather spend a night being chased by the Abominable Snowman than trying to track down old paperwork for a loan? Now you don’t have to do either! It’s true that a lot goes into qualifying for a mortgage, but most of the verification process - like collecting pay stubs, banks statements, and tax info - can be done electronically. Your loan officer and lender have partnered with companies like Equifax and the IRS to securely obtain a lot of your documentation. That means you won’t have to dig up a lot of old paperwork, or get chased by that crazy Yeti!
A Bank is the Best Place to get a Home Loan
While a bank can help you get a mortgage, their options are as weak as Popeye without his spinach. Banks have limited mortgage programs available with even fewer interest rate and closing cost options. That means you won’t get the best home loan for your situation. You’ll just get what the bank decides it wants to give you.
A mortgage broker, on the other hand, shops from multiple “banks” called mortgage lenders. This gives your broker access to a wide selection of programs, interest rates, and closing costs. Because they get quotes from various sources, your mortgage broker can help you find the best home loan with the lowest interest rate and closing costs possible.
Mortgages Take a lot of Time
Some people believe that getting a mortgage takes longer than waiting for Wile E. Coyote to catch the Road Runner. Now you can’t get a mortgage in a day, but it is a fairly fast process. New technologies are streamlining the mortgage process, making it quicker and easier to get a home loan. You can apply online in a “Blink,” electronically sign documents, and monitor the progress of your mortgage from anywhere you’ve got Wi-Fi.