Borrowers often find mortgages complicated and confusing and some mortgage myths may be preventing your clients from buying a home.
The National Mortgage News recently highlighted the following 7 mortgage myths that confuse borrowers:
1. Closing Cost Sticker Shock – The TILA-RESPA integrated disclosures extensively detail mortgage closing costs, but those expenses can still come as a surprise to borrowers who have already settled on a home to buy before receiving their upfront Loan Estimate disclosure.
2. Exaggerate the Extent of TRID-Related Closing Delays – Borrowers — not to mention some real estate agents — often think any change to the costs detailed in the TRID Closing Disclosure requires the lender to redo the form and delay the closing. In reality, there are just three types of changes that require redisclosure.
3. Who Can Cover Closing Costs – Homebuyers may be under the false impression that only they can pay their closing costs, and often don’t realize closing costs can be a seller concession.
4. How Difficult It Is to Compile Verification Documents – Gathering the verification documents required by lenders sounds daunting to borrowers, but often all they need to do is authorize secure delivery by an accountant or other financial services provider.
5. No Credit, No Problem? Not Quite – Consumers may think their lack of credit cards is a positive, not realizing that it really means they don’t have the kind of debt-payment history that lenders look for when qualifying borrowers.
6. How Low Minimum Requirements Really Are – The average consumer thinks the minimum down payment for a Fannie Mae loan is 10% to 12% and the minimum FICO score is 650 to 652, as opposed to the real minimums: 3% down and a 620 FICO. They also often did not know the acceptable range for debt-to-income ratios.
7. Leaving Tax Breaks on the Table – Borrowers often think mortgage interest deductions are limited to primary residences, but second-home loans (in certain circumstances) and home equity lines of credit also are eligible.
Source: National Mortgage News