Are you searching for a home loan for your new property? It might be time to get a few facts checked before you make the leap of getting a mortgage so that when you do, you can do so confidently, and with the help of the top realtor in Victoria BC. Keep reading to see some of the top mortgage misconceptions set straight.
Lenders Use Only the Best Credit Scores
Suppose you are applying for a mortgage with your co-borrower. It is very easy to assume that the lender will choose the highest credit score between the two of you. That, however, is not true. They take the middle score of three credit scores, in actuality, from each borrower and then take the lowest score from the middle score of each borrower.
Bit confusing, isn’t it? Let us simplify. Say you have a middle score of approximately 780, and your co-borrower’s middle score is 660. The lenders will approve your mortgage application using the 660 credit score. Your rate also would be tied to the 660 credit score, and as such, it will be pushed up significantly and can even result in you being declined for the loan. It is important to note that there are exceptions here as well. Suppose your credit score is much higher and you are also a higher earner; as such, some lenders will allow your credit score to be on file if your loan is for more than $417,000. To know where you stand, you must consult with your trusted real estate agent if there is a credit score disparity between you and your co-borrower.
The Rate You’re Quoted is the Rate You Will Get
The mortgage rate can change unless you have locked it at the moment it’s quoted to you. The mortgage rate you get is typically tied to the daily trading of mortgage bonds, so these rates can differ significantly from day to day. Refiners can lock in rates when they quote them to you, as long as they have enough information and documentation to ensure you’re good for it down the line.
It is the norm to get a quote when you begin the pre-approval process for your property, and it can be locked in from 90 to 120 days if you already have a property in place for the mortgage loan. If you don’t, unfortunately, you will not be able to get the rate that is quoted to you.
Fixed-Rate Mortgages Are Better Than Adjustable-Rate Ones
Nowadays, many borrowers prefer getting a 30-year fixed rate for their mortgage loans. And there is a good reason for it! For as long as the home is in your name, the rate will never change. However, it is important to note that the longer the rate stays that way, the higher the rate. So before you get into it, try asking yourself how long you wish to keep the property. If the answer is five years, then it is advisable for you to opt for an ARM (adjustable-rate mortgage) as you’d pay .875 percent less than you would on an FRM for 30 years.
Do you know that you can only lock in a mortgage quote once you have access to the best realtor in Victoria, BC, that can help you find incredible properties? Reach out to Brad Maclaren now for more info.
