Homebuyers are flocking to the North County housing market, making real estate one of the surprising stalwarts of the pandemic and economic downturn. In fact, mortgage rates are at an all-time low, which is encouraging even more buyers to search for homes. We understand that the real estate market can be confusing, especially for first-time homebuyers. Which is why we want to make sure that you don’t fall for some of these common mortgage myths.
MYTH: You don’t need to get pre-approved for a mortgage
It’s always a good idea to get pre-approved for a mortgage before you begin your North County home search. But in today’s market, it is absolutely essential. There are more buyers than sellers at the moment, which makes the market competitive for those in search of a home. If you haven’t been pre-approved, then it’s unlikely a seller will take your offer seriously. This is especially true if the seller receives multiple offers – which is a more common occurrence right now. Getting pre-approved shows the seller you are serious and that your deal is less likely to fall through because of problems securing financing.
MYTH: Everyone can qualify for a mortgage
The Great Recession was caused in large part by the ability for anyone to qualify for a mortgage – even if they couldn’t afford it. We’ve learned from those mistakes, and as a result, lenders have made it more difficult to qualify for a loan. Buyers will need higher credit scores and larger down payments than they have in the past. And in some instances, lenders are also scaling back the availability of jumbo loans for more expensive homes.
MYTH: Everyone gets a low interest rate
While interest rates have plunged, it doesn’t mean everyone qualifies for the lowest rate. While those with excellent credit may score a loan for less than three percent, most borrowers won’t see such a good deal. There are many things that influence your interest rate. This includes your credit score, how big your down payment is, what kind of loan you’re getting, and even the kind of home you want to buy.
MYTH: Current owners should refinance
While many current homeowners are taking advantage of low rates to refinance their loans, it isn’t the best course of action for everyone. Whether or not you should refinance your North County home depends on many factors. Are you planning to move soon? Then refinancing doesn’t make financial sense. Any savings you’d see in your monthly payment will be balanced out by the fees associated with closing on the new loan. Remember, closing costs can average up to six percent of the size of the loan. And if you already have a low rate, the hassle may not be worth it.
MYTH: Forbearance is the same thing as forgiveness
The CARES Act has allowed homeowners to request mortgage forbearance without incurring any penalties or fees. But don’t confuse forbearance for forgiveness. Mortgage forbearance gives you a break from your payments for a few months. But you will eventually have to make those back payments in the future. Check with your lender to determine whether or not you’ll pay a lump sum at the end of your forbearance period or if the amount will be added to the end of your loan.
Contact the Clark & Gilman Team
The North County real estate market can be an exciting – and confusing – place. Let the experts at the Cristine Clark & Jamie Gilman Team help you with your home purchase. Contact us today at 760-758-1211 or [email protected].