What Do You Know About Mortgages? Part 1

Mortgages are rarely fully understood by home buyers since most home purchases only happen every 5-7 years.  Many home buyers do not keep up to date on mortgages, as they are only interested in them around the time they want to buy.  To help educate, Zillow has created a list of the top 10 mortgage misunderstandings.  Here are the first 5 in the list.

1: “Your interest rate reflects the true cost of your mortgage.”

The annual percentage rate (APR) actually “reflects the true cost your mortgage.“  The APR includes various aspects of the loan including interest rate, points and other fees, which in theory makes it higher than your interest rate.  Compare APRs for mortgages rather than interest rates to get a better understanding of the mortgage.

2.  “Mortgage rates are only released once per day.”

Throughout the day, mortgage rates constantly change.  These adjustments make it important for home buyers to shop around for rates and obtain loan quotes.

mortgage misunderstandings

3.  “All lenders are required by law to charge the same fees for appraisals and credit reports.”

No law requiring lenders to charge the same amount for appraisals and credit reports is currently issued.  Various pricing for appraisals and credit reports allow for competition between lenders.

4.  “I must get my mortgage through the same lender I was pre-approved with.”

A pre-approval is issued by lenders as a conditional agreement of the estimated the loan size that the company will lend to the borrower.  Most pre-approvals require verification of income and a credit check.  A home buyer is able to receive multiple pre-approvals in order to choose the best loan.

5.  “You will almost always get the best mortgage interest rates at the bank where you have a checking account.”

It is doubtful that a bank will give you the best mortgage interest rate just because you bank with them.  However, some banks do give discounts to their customers.  Home buyers should include a quote from their bank as well as other resources to determine the best rate.

Remember, it is important to shop around for loans and receive multiple quotes as there are varying aspects of each loan for each lender.

Which misunderstanding did you have regarding mortgage loans?

Don’t get stuck in a mess of mortgage misunderstandings, tune in next week to read the final 5.

If you are interested in obtaining a mortgage or refinance loan in Ohio, Pennsylvania or Indiana, call ReCasa Financial Group today at 614.221.6770.  Our mortgage and refinance specialists have a great understanding of the permanent financing world.