Mortgage Myths Debunked
Is Pre-Qualification the same as Pre-Approval?
A common misconception many people have is that getting pre-qualified is the same as getting pre-approved. However, these are actually not the same. When you are pre-qualified, this is based on us looking at your debt and liabilities, deciding what you could afford, and that you are in a strong position to become approved. Pre-Qualification is important because most realtors and home sellers receive this before seriously considering your offer. Approval happens after we perform a credit report, an appraisal is ordered, the lender analyzes in detail your financial records, and confirms with us your credit records. If you’re looking to become pre-qualified, visit our website and download our pre-qualification application.
Contrary to what many people may believe, buying a home is not the pricier of the two. In fact, owning a home can pay off to be a worthwhile investment. As you make payments towards your own home, you build equity, and sense of financial well-being. In addition, many home owners reap the benefits of tax deductions which can help cut costs in the long run. To learn more about equity check out our Home Equity blog entry.
As you can see, the down payment percentage has decreased throughout the U.S. One reason for this is because interest rates have been on the steady rise. Here is a scenario: Today we have a borrower who could only put 12% down, but could lock in a rate of 4.25%. Over the course of the next couple years, they wait to save more money to meet the 20% down payment. However, since time has passed they can only lock in at a rate of 6%. In this case, it would’ve been to the buyer’s benefit to take advantage of the lower rate along with a lower down payment because they’d get more home for their money then.