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Mortgage Myths

Myth 1: A preapproval guarantees a mortgage
Fact:  A pre-approval does not guarantee a home mortgage. There is much financial paperwork that has to be sorted through by the lender who has to examine these items carefully before any final decisions can be disclosed.

Myth 2: Self-Employed persons cannot receive mortgages
Fact:  Mortgage Companies are now recognizing self-employed persons as reliable persons capable of sustaining their annual incomes to meet payments for mortgages.

Myth 3: A down payment of 25% is necessary to secure a loan
Fact: A down payment of 5% is necessary for a mortgage.

Myth 4: The months before applying for a home mortgage should be spent saving for the down payment.
Fact: Although saving for a home down payment is encouraged, having an idea of the mortgage payment and the fees that accompany the loan gives the applicant time in advance time to plan their finances. If their funds allow them to, home buyers are recommended to pay off their bills to ensure that in the future that the mortgages payments will be covered without having to pay interest rates on credit cards or overdue monthly bills.

Myth 5: Extra payments made at the beginning of a home mortgage does not shorten the time
Fact: Making extra payments at the beginning of a home mortgage minimizes the interest rate on a home loan.  It is the interest rate that most home buyers make payments toward at the start hoping to reduce the principal.

Myth 6: When mortgage rates drop, lower payments can be made
Fact: Mortgage rates decrease over time as the home buyer pays off their mortgages. Most buyers are tempted to reduce their payment because of lower rates but are encouraged to keep their initial payments to take advantage of paying off their loans faster.

Myth 7: If I lose my job, I lose my house
Fact: It is required that all borrowers maintain a stable job to ensure full payments of their mortgages. However, in the event of a job loss, the homeowner should notify their lender as soon as possible to alert them of the situation to make preparations for their mortgage payments.

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