5 Biggest Mortgage Mistakes & Misconceptions!
We're going to talk about the five biggest mortgage mistakes and misconceptions.
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#1
I DON'T WANT TO PULL MY CREDIT BECAUSE I DON'T WANT IT TO IMPACT MY CREDIT.
We hear this all the and this is not the case. You can have your credit pulled, this is the only way you can use your credit. This is a very important part of being pre-approved.
If you have established credit, you are not going to see a drop in your score. The only time that someone will damage their credit by having it pulled is when multiple mortgage brokers and banks are working on their application at the same time.
If you're working with one specific group, you don't have anything to worry about.
#2
WHEN DOES MY PRE-APPROVAL EXPIRE?
A pre-approval is made up of two things.
A) A rate hold which is held for 120 days with most institutions.
B) Your qualification. Assuming that interest rates and your situation has not changed, even if you don't buy a home for a year, you are technically going to qualify for the same amount of financing. If everything is the same, it's a simple formula of income compared to liabilities, qualification, and stress test.
#3
NOT UNDERSTANDING YOUR MORTGAGE PRODUCT
People are having conversations with us not understanding that they were on a fixed rate mortgage that could have dramatically high penalties. Everyone needs to educate themselves. Work with a good adviser that can take the time to explain these products so that you can make an educated decision.
There is no mortgage broker or banker in this country that should be telling you what product to take, we should be helping you make a confident decision.
Variable and fixed-rate mortgages are two dramatically different products. They both have pros and cons. Make sure you have a good understanding of every aspect of those products before you sign that document and commit to that mortgage.
#4
DOWNPAYMENT
Down payments can be an absolute nightmare when it comes to documentation. It can also make your life very frustrating when it comes time for your final approval. Our biggest tip is to leave your money in one or two accounts and don't touch it. That's going to make your life a lot easier when it comes to documentation.
As an example, if someone has five or six different bank accounts with constant transfers throughout, we have to trace every single dollar in every transfer back 90 days. There's going to be a lot of documentation and there's going to be a lot of questions. It will be a huge relief for you if you do not have to deal with that.
#5
CHASING RATES
Rates are a very important part of this process. You cannot chase an interest rate otherwise you will likely end up with a poor product. There are multiple different products in our industry and some of them will have a lower rate but it's a very poor mortgage product with no portability, higher penalties, and is very restrictive.
Rate is a major factor but it's not the entire product. You need to make sure you're getting into a good product with a competitive interest rate.
Don't chase rates.
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