Credit system is complex, and it realizes not everyone. Even in the US where the mortgage market is well developed, there are many uncertainties. It is believed that people are buying houses and apartments on average every five or seven years, and do not seek to delve into the essence of credit. To clarify the situation, analysts Zillow compiled a list of the most common misconceptions associated with a mortgage in the US.
In fact, the real cost of the mortgage interest rate is expressed on an annualized basis (annual percentage rate, APR). It includes loan interest, fee for loan processing, mortgage insurance (if required) and other charges. However, this rate does not reflect the cost of homeowner's insurance policy. APR is usually higher than the cost of borrowing, so when choosing a mortgage program should pay attention primarily on it to get a more accurate idea of the real cost of mortgages.
2. Mortgage rates are revised only once a day
Interest rates on various types of loans can vary within a day, sometimes dramatically. It is necessary to carefully choose from a variety of offers - just so you can find the most convenient option.
3. All credit institutions are obliged by law to charge the same fees for valuation of the assets and credit
In fact, no such law. Some banks cancel such charges to make rates more competitive. In contrast, there are organizations that overstate prices. Therefore, when looking for the best deal is to compare the hidden costs in different banks.
4. The borrower is obliged to take out a mortgage from that bank, which was signed a preliminary agreement
At the conclusion of a conditional preliminary agreement (pre-approval) estimated amount of the loan that the bank is ready to provide. Usually at this stage it is also checked income and credit history of the borrower's future. However, the latter does not have to continue to be a customer of the bank, which signed a preliminary agreement. It is necessary to get at least three variants of credit before finally take out a mortgage.
5. The best offer you can get in the bank, where there is a current account
Some banks do make discounts for regular customers, but it is unlikely that you will be given lower rates because you have opened an account there. Always is chosen from proposals of several banks.
6. If the loan takes the wife, when determining the rate of their credit histories play an equally decisive role
When the spouses together take a mortgage, banks seek a credit score of three major agencies: Equifax, Experian and TransUnion. Those calculate the average score of the ratings of both spouses, and use the lowest of the two, to determine the cost of borrowing. This means that the greater role played by the spouse having the worst credit history. It does not matter which of the two is primary and secondary borrower.
7. It is impossible to get a loan with a down payment of less than 5%
Many mistaken, believing that to get a loan have to invest 10, 15 or even 20% of the property value. However, FHA (Federal Housing Administration, FHA), you can get a loan, making only 3.5% as a down payment. Similar programs operate in the Department of Veterans Affairs (Department of Veterans Affairs, VA) and USDA (United States Department of Agriculture, USDA).
8. Those whose homes were seized for the debts will have to wait seven years before taking a new loan
Those who had to go through a short sale for a period, you can get a new loan in 2-4 years, depending on the size of the down payment and loan type. In case of a foreclosure waiting period longer - 3-7 years. But even those who have enough money, will not be able to establish a good credit history for just a couple of years.
9. When the negative difference between the cost of providing and credit debt refinancing prohibited
Today, millions of American owners of the amount of debt exceeds the value of the property. For them, there are two programs, one of which, Home Affordable Refinance Program (HARP), is available to those who give guarantees on loans Fannie Mae or Freddie Mac. The second program, FHA Streamline Refinance, designed to help debtors, loans which insures the Federal Housing Administration.
10. Refinance mortgages can be only once in 12 months
Under the refinancing loan repayment is understood in the same bank with the help of a loan from another bank, where the lower interest rates. If the loan guarantees allow Fannie Mae or Freddie Mac (and the majority of these loans), to refinance a mortgage at any time. It is only necessary to consider the difference between the current lending rate of the borrower and the new lending rate should allow to raise enough funds to cover the monthly cost of refinancing in two years.
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