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Updated by Fusion 360 on Nov 19, 2014
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8 Common Mortgage Misconceptions

Mortgages often seem difficult to understand, but they don’t have to be. Once one understands the most common mortgage misconceptions, they can more efficiently navigate the real estate market. An individual may also meet with on of their local mortgage companies to better understand what a mortgage entails.

Mortgage Rates are Stable

Mortgage rates often change several times throughout the course of one day. Due to this, it is recommended that homebuyers work closely with their mortgage companies to find the best rate.

Lenders Must Charge the Same Rates

Some mortgage companies alter their costs to become more competitive. On the other hand, some mortgage companies may charge higher rates due to the nature of their business.

One Can’t Change Companies Post Pre-Approval

Pre-Approval simply estimates the amount a mortgage company would lend their client, but it is not a legal obligation. After an individual is pre-approved for a mortgage, they can still use another mortgage company.

Generally, mortgage companies advise their clients to receive at least three quotes before they select a company to work with.

Personal Banks Offer The Best Mortgage Rates

Another common mortgage misconception is that one will receive the lowest mortgage interest rate with their personal bank. Although some banks do offer their customers mortgage discounts, this is not the case for all banks.

In order for one to get the best rate, it is recommended that they visit several mortgage companies in addition to their bank to compare rates.

A Spouse Can’t Harm Your Rate

When mortgage companies evaluate their clients’ credit, they look at both partners’ credit history. Therefore, the least creditworthy borrower has a large impact on a couple’s mortgage interest rate.

One Must Put Five Percent Down

Although many individuals put up to 20 percent down on a home, this does not have to be the case. In fact, some homebuyers can put down as little as three percent and still obtain a mortgage.

Home Loans Can Only Be Refinanced Every 12 Months

Many people who are underwater in their current mortgage believe that they can’t refinance their mortgage. However, Americans who are underwater in their current mortgage can often refinance using the Home Affordable Refinance Program or the FHA Streamline Refinance.

Home Loans Can Only Be Refinanced Every 12 Months

Generally, individuals with loans can refinance as frequently as they would like. However, many mortgage companies recommend that their clients wait to refinance until the difference between their contemporary rate and the available rate will pay for the mortgage change in two years.

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Writer

Mackenzie Martin is a mortgage writer. Information by Castle & Cooke Mortgage (NMLS# 1251). Mackenzie writes for Fusion 360, an advertising agency in Utah. Find her on Google +.

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