Myth: My brother-in-law put 5% down and has the same loan amount as I do, so my monthly PMI will be the same amount as his.

Truth: PMI is calculated using the borrower's credit score as well as LTV. The lower your credit score, and the higher the LTV, the higher the PMI will be. Your brother-in-law may have perfect credit, therefore his monthly PMI payment may not be the same as yours if you have blemished credit.

 

Myth: If I am approved for a mortgage, that means I will get the interest rate I saw advertised in the Sunday Paper.

Truth: The Mortgage Interest Rate you are offered is strongly tied to your credit score and credit history. Many people mistakenly think that if they are approved for a mortgage loan, they will get the same rate that they saw advertised in the paper. This is not so, the rates advertised assume perfect credit, a minimum loan amount, minimum down payment, etc... If you have blemished credit, your interest rate will most likely be higher than the rates you see advertised. Just as with credit cards and other consumer loans, interest rates for mortgages coincide with your credit history, a person with blemished credit, previous bankruptcy, liens, maxed out credit cards, etc. will not get the same interest rate as someone who has perfect credit and low balances on credit. A borrower with blemished/poor credit is considered a higher risk borrower, and therefore the interest rates will be higher than a borrower with perfect credit. You can always refinance your mortgage later, once your credit has improved.

 

Myth: I am now current on all my credit cards and my car loan. I was behind on them for a few months, but I caught them all up
last month, so I have good credit.

Truth: Your credit history is just that, your history. If you were late on payments last month, your credit history shows that you don't
always pay your payments on time. Although you are current this month, your credit history shows that you were late last month. The longer the span of time between the last late payment/derogatory credit line, the better your credit looks. This doesn't mean that you won't be approved for a mortgage, however you may not be offered the lowest rates available. Time is the main thing needed in order to improve blemished credit ratings.

 

Myth: Getting a mortgage is a scary thing and I don't understand it all.

Truth: Getting a mortgage shouldn't be stressful. We explain to each and every customer, in laymen's terms, what we are going to need and what you should expect. We give you options, choices, explanations and counseling if requested. Our borrowers are welcome to ask us
any questions, at any time, that they want, and are given our personal email addresses for instantaneous contact. We keep all clients up
to date on the status of their loan and our borrowers never bother us by calling to ask more questions about their loan, our clients ARE our business.

Interest rates change daily, sometimes several times a day. It is never wise to try to "time the market" when deciding to lock a rate. No one has a crystal ball and knows what will happen to the interest rates the day after you lock. Locking a rate is a commitment between you and your mortgage company. The mortgage company commits to giving you a certain interest rate for a specified number of days, even if the rates go up before you close your loan. YOU commit to doing the loan with that mortgage company at that interest rate, even if the rates go down before you close. You must be comfortable with the rate you choose when you lock, and not worry what happens with rates after you lock.

Myth: I saw that Alan Greenspan lowered the prime rate yesterday by _ point, so that means mortgage rates went down _ point, right?

Truth: Wrong. The prime rate has nothing to do with mortgage rates whatsoever. Mortgage rates are tied to the yield on bonds and have
nothing to do with the prime rate.

 

Myth: I have perfect credit and don't want to prove my income. I can still get the same interest rate I see advertised in the Sunday Paper since I've got perfect credit, right?

Truth: Wrong. If you do not want to prove your income, you must qualify for a program that allows that, which means your interest
rate will be slightly higher. The rates in the paper assume you are proving your income/assets, etc., and have perfect credit. If you don't prove your income, you will not get the same interest rate as someone else with perfect credit and who does prove his income.

 

Myth: I've had some problems in the past with my credit, so if I do get approved for a mortgage the rate will probably be 18%.

Truth: Wrong. We don't even have any mortgage programs with an interest rate that high! If you are approved (and we have many, many programs for borrowers with blemished credit), your interest rate will most likely be anywhere from .50% to 5% higher than what you see advertised, depending on your particular situation.

 

More Questions? Please email us at Info@gcmortgage.com and we'll be happy to answer any questions that we have not addressed.

*Please consult your tax professional regarding your personal situation.