Debunking 5 Common Mortgage Refinance Misconceptions

MortgageIt’s taxing to move from one home to another due to unpaid mortgages. You must do what’s necessary to keep your house. Don’t let these five mortgage refinances myths stop you from refinancing your mortgage to save your home.

Myth #1 – Majority of borrowers can’t qualify for refinancing.

The truth is that you may be thinking that your credit is much worse than it actually is. You just have to find a mortgage company that willing to work for you. The brokers from City Creek Mortgage say that competent companies work with transparency and provide full disclosure of essential information.

Myth #2 – Obtaining one quote for refinancing is enough.

Many borrowers don’t realize the importance of shopping around and comparing their refinance choices with different types of lenders. Contact as many lenders to see which one can help you out the most.

Myth #3 – A home appraisal won’t have an impact on your mortgage refinance rate.

A home appraisal determines your loan-to-value (LTV) ratio. Higher LTV yields a relatively higher interest rate, which will require you to get private mortgage insurance (PMI). Work with a mortgage that deploys a reputable appraiser in valuing your home.

Myth #4 – You can use as much credit from your home equity for refinancing.

You can borrow as much as 80% with cash-out refinancing, considering that your conforming loan balance is less than $417,000. If your state, however, considers a high balance as much as $625,000, you may only borrow 60% of the value of your home for cash out refinancing.

Depending on a lender, you may refinance as much as 95% of your home’s value if you’re not planning on taking out cash. But a PMI may require you if you borrow 80% or higher than your home’s value.

Myth #5 – Your refinance mortgage rate is going to be exactly what is advertised.

There is a difference between actual borrower’s payment and advertised mortgage rates. The advertised mortgage rates direct towards purchase loans rather than refinancing mortgages.

With these truths in hand, you can make better decisions in handling your mortgage issues.