Platinum Home Mortgage
Common questions and concerns of home buyers revealed as fact or fiction.
Contrary to popular belief, these terms are not interchangeable. Getting pre-qualified by a lender allows the buyer to have an estimate of how much the lender will loan, but is not a guarantee. A pre-approval is assurance from the lender of exactly how much they are willing to loan.
An ARM is a loan with an adjustable interest rate that varies throughout the loan term and results in varying payments. Many people lean towards 30-year fixed rate mortgages because they like the security of having the same payment for the term of the loan. It is wise to consider various loan types as each may have different features and may be more cost effective. 15-year fixed is best to build equity and net worth. As a rule of thumb, fixed rate mortgages are best suited towards long term homeowners, and adjustable rate mortgages are geared towards short term homeowners.
It is a common belief that without 20% down you cannot purchase a home, but that is simply not true. For example, FHA allows borrowers to purchase with just 3.5 % down, and VA offers veterans down payments of 0%. Also, certain communities offer different home buyer assistant programs to help lower down payment percentages.
Some loan programs require stellar credit scores; however, others are targeted towards borrowers with lower credit scores. It is best to inquire with a mortgage lender to see which programs they offer before ruling out buying based on credit score alone. There are also ways you can improve your credit score when you're ready.
