Mortgage Myth #1
"Don't change jobs while applying for a mortgage"
Bullsh!t. You can switch jobs during the process.Verify my mortgage eligibility (May 28th, 2022)
Don't let a mortgage advisor tell you not to make more $$ or take a promotion. You can close on a purchase of a new home with an offer letter from your new job.
You will need to be prepared with a fully signed offer letter and the contact details of your new hiring manager. You may also need to allow for a few days to have your new job verified by the underwriter. But if you get a juicy job offer - take it!
Of course, you should be making more money than you did before. If you take a job making less $, that could be a problem.Verify my mortgage eligibility (May 28th, 2022)
Mortgage Myth #2
“Don't make large deposits.”
This one is almost completely unrealistic. Buying a home costs a lot of money, and few people save their money in a checking account. Most have investment accounts, retirement accounts, and savings accounts - all better suited to storing saved money.
When there is a gift from a family member involved, it almost always means a large deposit. Rarely (never) does anyone want to part with money before they must. This means the gift will come toward the closing. It's just our nature to wait until we have to to let go of that much money.
This means that large deposits are normal.Verify my mortgage eligibility (May 28th, 2022)
What you need to keep in mind is showing the source of these deposits. Lenders are forced to police many different laws and regulations for different levels of government. So when you transfer money from your savings or investment accounts to your checking account in preparation for the closing of your new home - keep accurate records of the movement and be prepared to show paperwork tracing the movement of the money from the source to the end point.
Mortgage Myth #3
“Don't let more than one lender pull your credit.”
It seems every bank, financial goal tracking and budgeting app comes with the ability to see our credit score. So it feels like we know exactly what our credit score is.
But what do these numbers really mean?Verify my mortgage eligibility (May 28th, 2022)
It's not just about how much money you've borrowed, but also about your credit history. The credit score is based on the information in your credit report.
This is where it gets a little complicated. There are many different scoring models, so your score might be different depending on the type of scoring model used. The most common ones are the FICO score and VantageScore.
Any lender worth their salt has the capability to do a soft credit check that will mirror your full credit report. They can even pull all 3 bureaus if they want. It's cheap, and easy. And the benefit to you is that it doesn't show on your credit report as an inquiry - no impact to your credit scores.Verify my mortgage eligibility (May 28th, 2022)
A mortgage credit pull usually shows a lower score than we are used to seeing. This is for several reasons. The primary reason is a mortgage is a big, long-term debt with a monthly payment that comes every month. There is no "let's just pay the minimum payment this month and catch up next month" thinking here. Nope, you must pay the payment in full - every. single. month.
It's a more conservative assessment of your ability to repay debt.
You can - and should - shop around for a mortgage.Verify my mortgage eligibility (May 28th, 2022)
You will want to find the right person to work with, find the best rate, understand the different down payment options, and different mortgage options available to you. Different lenders charge different amounts for mortgage insurance if you putting less than 20% down on the home. By the way, the difference in mortgage insurance is one thing those "one stop shop" wannabe fintech mortgage lenders don't show you.
All of these things mean you should shop around for your mortgage. At least call few lenders.
No mortgage advisor can be specific with you until they see your credit history and all 3 scores. So, let them do a soft credit check so they can speak with you in full about your home loan.
To be clear, don't let a lender do a hard credit check. If they need that to properly quote a rate, they are trying to box you into using them. If a lender cannot do a soft credit check, then move on to the next one who can.Show me today's rates (May 28th, 2022)