9 Mortgage Myths That'll Cost You if You Aren't Careful
There are a lot misconceptions about mortgages. This article addresses nine of them. However, I want to focus on two of them. First of all, getting a mortgage is complicated. The process is complicated and cumbersome. But, for most people, they only get a few mortgages in their lifetime. Many people purchase a home then refinance it. Or they upgrade to a larger home. Later in life many people go to a smaller option to fit their changing lifestyle. Yet as the article states:
Buying a home is probably the single most expensive purchase a person will make during his or her lifetime. Homeownership is often viewed as a sign of success in America, and according to recently released third-quarter data from the Census Bureau, the homeownership rate in the U.S. stood at 63.5%. This figure represents the fulfillment of many American dreams.
So how is it, that a mortgage, the single largest purchase most people will make, can create so many myths and misconceptions? This article endeavors to clear up much of that confusion. I want to focus on one of the misconceptions.
Myth: Mortgage rates are the same everywhere.
While it's true that the federal government is the governing body that controls interest rates, not every lending institution offers the same interest rates. To understand this, let's look at where the average consumer can gets a mortgage. There are national banks, local banks, credit unions, online lenders or mortgage brokers. Each type of lender is unique in their business model. What you need to consider is that most of these institutions offer a myriad of different services. You are familiar with them: checking and savings, consumer loans, mortgages and much more. The list goes on and on. So to maintain profitability, most institutions charge their customers a higher interest rate to cover their overhead. After all, with a large building, a high payroll, and high advertising costs, they have a lot to pay for. That high cost is passed on to the consumer. However, a mortgage broker, has one service: Mortgages. A mortgage broker is often able to offer lower rates, because they don't have the overhead of a bank or credit union. A broker may also be able to secure an interest rate at a bank lower than if you had gone directly to that bank.
As you consider a home loan or a mortgage refinance, review the 9 mortgage myths in this article. It will help you to make a solid financial decision with the biggest purchase you will make in your lifetime.