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Jun 23

4 Wrong myths about the mortgages

By Jason A Smail | General

Mortgages (mortgage loans) most used by consumers to buy a house. Before deciding to take a decision, it helps you look at mortgage tips so as not to get caught up in the myths surrounding mortgages in circulation and often misleading. In the meantime, perhaps you need to check out the manufactured homes if you want a house that ready to be settled soon after the purchase.

Here are four wrong mortgage myths:

1. Just Need Saving to Pay Home Advance

One of the biggest expenses in buying a home is to pay a down payment (10% – 30% of the price). However, do not forget other additional costs when buying a house, which is stamp duty, application fees, appraisal fees, legal fees, and mortgage insurance. (Read: Buy Property, Do not Ignore Extra Charges)

2. The Greater the Advances, The Better

Paying a down payment is greater than set, making the loan amount smaller, so monthly installments are even lighter. However, it causes your money to be sucked so much that you do not have the funds for home repair or other necessities. It’s a good idea to save the excess money for an emergency.

3. Pay Bigger Installment to Shorten Tenor

Unless you have a Flexi mortgage, paying more monthly installments than required may only be of little benefit to you. Furthermore, in the lock-in period that is usually applied to most home loans today, you can even be penalized for completing your home loan. (Read: Tips on Choosing Term of mortgage Installment)

4. Refinancing mortgage Is a Bad Idea

Refinancing is taking a mortgage or a new home loan to pay off the old home loan. Refinancing, assumed to be done after a lock-in period for an old home loan, can result in significant monthly installment reductions, but it can also result in adverse financial effects.

When considering refinancing, it is important to consider the interest savings of the old home loan and the initial cost (if any) as well as the new lending rate.

The second thing is very important because interest rates can be lower in the first year but higher in the following years.