Myths and Truths About Home Buying Loans

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Home buying loans enable you to fulfill your dream of owning the house of your dreams. Unfortunately, there are so many misconceptions associated with these loans. As a result, the people who need them the most hesitate to avail them. If you had ever given this option a thought, read on to discover the truths of common myths you probably came across.

Myth: Home Buying Loans and Mortgages are the Same

Truth: If you're a first-time homebuyer, you may believe the terms "home loan" and "mortgage" mean the same. This is an easy mistake considering how closely they're related. By definition, a home loan is a debt you incur when buying a home. The property is considered the security against which you avail the loan. Your lender will create a lien on the property until you clear your debt.

On the other hand, mortgages are loans which you need to pay back in full before you can claim the property as your own. A mortgage loan is provided as a percentage of the asset's value. In case you default, ownership of the asset will be given to your real-life or online mortgage broker.

Myth: You Cannot Qualify for a Home Loan with Bad Credit

Truth: Getting a loan with a less-than-perfect credit score is not impossible. There are several types of loans that are designed specifically for poor credit scores, such as conventional home loans from the Federal National Mortgage Association (a.k.a. Fannie Mae). Your lender can recommend from these before issuing a mortgage loan pre-approval letter.

That said, buying a home can still be a challenge. So, once you find a reliable broker who can meet your needs, enroll in a legitimate credit repair program. Doing so will help you repair your credit in case you ever need to refinance your home loan.

Myth: Loan Refinancing isn't Worthwhile

Truth: There are actually many compelling reasons for you to apply for home loan refinance. First off, you get to save on interest costs. In general, customer loan rates increase whenever home loan rates go upwards. Unfortunately, loans may not trend downwards if the situation is reversed. In this case, refinancing your home loan is the best option to avail market interest rates, save costs, and reduce your monthly installment burden.

Another reason to consider loan refinancing is switching between floating rate and fixed loans. If there is value in switching the loan, you can easily do so with refinancing. However, make sure to ask your online mortgage broker about the charges you may incur when pre-closing your loan. Don't worry; chances are the charges are negligible compared to the savings you will get through your new loan.

While these are the main myths making the rounds, they aren't the only ones out there. To put your mind at ease and assure yourself that you're making the right choice, be open with your lender. A reputable broker will always answer your questions and put your mind at ease before finally drafting your online mortgage pre-approval loan.

If you're looking for a home loan refinance option, reach out to an established and trusted online mortgage broker like EZ Online Mortgage. Our specialists can help.

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