5 Myths of Mortgage Lending
- “I can close your loan with no origination fee and no closing costs.”
While it is true that a closing statement can be prepared to show no fees, there are fees that must be paid by someone. You cannot tell the state, country or municipality that they cannot collect a tax due to them! The reality of what happens is the lender raises your interest rate and uses a premium paid to them by the investor in the secondary market to pay the cost for you. You are still paying for it, but in the form of a higher rate than a fee. More often than not, the higher rate is a greater cost to you over the life of the loan than if you had paid that fee at closing.
- "My rates are always the lowest in town.”
Unless a lender is using a portfolio product, (one that is not sold in the secondary market and usually not a fixed rate) almost all loans are sold to a small group of secondary investors. That means everyone is paying almost he same price for the money they lend. I recognize that on “any given Sunday” one investor’s rate may be slightly different that another. Our job is to shop those investors to find the best market pricing for you.
- "I require less documentation than other lenders.”
Using the same basis as number 2, investors in the secondary market require the same documentation from all lenders. There are special portfolio programs that are available that do not require income or asset verification. They are typically designed for the self-employed borrower and have slightly higher interest rate. A good rule o thumb: The less documentation you are able to provide, the higher your rate will be.
- “Since you are self-employed, you will have a hard time getting financed.”
Self-employed borrowers have special needs because of the details needed to underwrite a personal or corporate tax return. We specialize in helping the self-employed borrower. We are very adept at underwriting tax returns to maximize the income for qualifying purposes. Being self-employed means a little more paperwork, but not a greater difficulty in obtaining a mortgage.
- "Bad credit-No problem.”
Credit is the most important part of the mortgage qualification program process. The more difficult a credit file is, the stricter the qualification requirements are. We help any way that we can to assist you in correcting misinformation that appears on your report. If negative information proves to be accurate, we still are able to offer competitive products and pricing to help you obtain your new home.
We hope this information will help you make an informed decision when choosing a lender to work with. We will always provide you with accurate and realistic information to help in making your decision. We want to be your lender of choice, and deliver peace of mind when your closing takes place.
To speak to an FFG consultant regarding real estate mortgages and financing opportunities, email us or call us at 678.921.2929.