{"id":1132,"date":"2020-08-27T16:09:01","date_gmt":"2020-08-27T16:09:01","guid":{"rendered":"http:\/\/www.mikeclover.com\/blog\/?p=1132"},"modified":"2020-08-27T16:09:01","modified_gmt":"2020-08-27T16:09:01","slug":"2020-mortgage-myths","status":"publish","type":"post","link":"https:\/\/www.mikeclover.com\/blog\/2020\/08\/27\/2020-mortgage-myths\/","title":{"rendered":"2020 Mortgage Myths"},"content":{"rendered":"

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2020 Mortgage Myths<\/strong><\/p>\n

Life in 2020 is a time of confusion, especially for the real estate and mortgage industries. What are the rules this week? Will interest rates continue to fall or are they going up soon? How has the pandemic affected home sales? Should I sell or refinance?<\/p>\n

On top of the questions, several myths have been circulating, and it\u2019s time to put them to rest. Here are a few of the most damaging or confusing:<\/p>\n

#1 \u2013 \u201cEvery borrower can get a low interest rate this year.\u201d <\/strong><\/p>\n

No \u2013 that\u2019s not true. The factors that affect individual interest rates have not changed. Borrowers with high credit scores, a good down payment, verifiable steady income, etc. will get the best rates, just as they always have.<\/p>\n

Other borrowers will likely pay less than they would have when rates were higher across the board, but they won\u2019t see the lowest advertised rates.<\/p>\n

In addition, lenders are tightening up their regulations regarding credit scores. Most will not offer a loan to a borrower with less than a 620 score, and some have raised the bar even higher.<\/p>\n

That brings us to Myth #2\u2026 \u201cIt\u2019s easier than ever to get a home mortgage.\u201d <\/strong><\/p>\n

No, it\u2019s more difficult, because most lenders are being more careful than ever. The bank\u2019s have less cash flow than they did last year, simply because approximately 8% of homeowners were granted forbearance in the face of COVID-19. Others went into foreclosure.<\/p>\n

Banks want to be assured that the loans they make will result in regular monthly payments coming in. As a precaution, they\u2019re checking employment and assets several times during the loan process. This is in addition to imposing stricter requirements at pre-approval.<\/p>\n

This, combined with the fact that lenders are busier because more people are trying to buy or refinance, is slowing the closing process. If you\u2019re buying a home, be sure to ask your lender how long the closing process will take before you write an offer specifying a closing date.<\/p>\n

The third myth \u2013 \u201cRefinancing is always the smart thing to do.\u201d<\/strong><\/p>\n

It might be \u2013 but it might not be. It all depends upon the difference between your current rate and the rate you could get on a new loan, the refinancing cost (generally 2%-6%) and how long you intend to stay in the house.<\/p>\n

The cost of refinancing, by the way, just went up for many people. Fannie Mae and Freddie Mac just announced that as of September 1, they\u2019ll be imposing a 0.5% refinancing fee. The lenders can absorb the fee or pass it along to the borrowers.<\/p>\n

Before you commit to refinancing, find out how much you would save on each monthly payment. Then look at your good faith estimate to see the cost of your new loan. Divide the cost by the monthly savings to see how many months it will take to recoup the cost of the loan.<\/p>\n

For example: If your new loan will cost $4,500 and you\u2019ll save $100 per month, it will take 45 months to break even. If you\u2019re moving in 3 years, don\u2019t refinance!<\/p>\n

Myth #4 has been around for a long time\u2026 \u201cYou should find a house before you apply for a mortgage.\u201d<\/strong><\/p>\n

That\u2019s never been wise, and it\u2019s even less wise today.<\/p>\n

In most markets we\u2019re experiencing a shortage of homes for sale. That means home sellers don\u2019t have to wait around to see if you\u2019ll be able to get a loan.<\/p>\n

In fact, many agents won\u2019t even show homes to potential buyers who aren\u2019t pre-approved. They know it will be a waste of time because their offers will be passed over for offers from buyers who are pre-approved. In addition, many sellers are worried about the pandemic and don\u2019t want to let buyers into their homes without knowing they have the ability to purchase.<\/p>\n

If you want to buy a home in 2020 (or any other year) your first stop should be with a mortgage lender. A bonus benefit of pre-approval is that you\u2019ll know just how much you can pay, so can avoid the heartache of falling in love with a home that\u2019s out of your reach.<\/p>\n

Myth #5 deals with the meaning of forbearance. Hint: It does NOT mean forgiveness.<\/strong><\/p>\n

Some people mistakenly believe that getting forbearance means not having to repay the loan. Who knows how that got started. It definitely isn\u2019t true!<\/p>\n

Forbearance is nothing more than a \u201ctime out\u201d from making payments without negatively impacting your credit rating or incurring late fees. At the time you are granted forbearance, you\u2019ll come to a repayment agreement with your loan servicer.<\/p>\n

Those with loans backed by Fannie Mae and Freddie Mac can opt to repay the missed payments at the end of the loan \u2013 or when the house is sold or refinanced. In other situations, the borrower will have agreed to make up the missed payments at the end of the forbearance period or over a specified number of months.<\/p>\n

When you want true answers to your mortgage loan questions, call us. We at Homewood Mortgage, the Mike Clover Group,<\/strong> will be glad be glad to assist. We\u2019ll also be glad to get you pre-approved before you go shopping, or to show you how much you might save by refinancing.<\/p>\n

Call us today at 800-223-7409<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

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