While low inventory is certainly challenging home buyers, not having a clear understanding of mortgage financing can also create issues. By having good information, potential home buyers will be able to make better decisions that will help them compete for properties more favorably.
Most home buyers don’t realize how the mortgage rate is calculated for a borrower. While annual income is important, a good credit score, low debt-to-income ratio, loan-to-value ratio and the ability to repay the loan are vital concerns.
A variety of myths seem to permeate the market such as rates are set and released once a day; FHA loans are for first-time buyers only; pre-qualifying a buyer commits the lender to the loan; lender fees are not negotiable and adjustable rate mortgages always go up.
A misunderstanding of actual mortgage practices may be a contributing factor as to why more buyers are not taking advantage of what are still historically very low mortgage rates.
While getting solid information about mortgages and being pre-approved from a lender are very important, it is only one step in the home buying process. Success in buying a home in today’s market should begin with a Real Estate Professional who will coordinate all the different parts of the transaction including mortgage, title, insurance, inspections.