While fixed mortgages will be the best choice for some, many will benefit from the lower initial payments of the ARM. Check this page out for more info: Fixed vs. Adjustable
#2: Pay off your mortgage as soon as possible.
Your mortgage is a very large amount of money in most cases. Many people assume that having a loan that large is a bad thing, and paying it off as soon as possible should be a priority. In reality, your mortgage is probably the cheapest money to borrow!
You can deduct the interest you pay on your mortgage, you can't do that with the interest you pay on those credit cards! In most cases, the best way to save money, is to pay down your mortgage only after you have paid off your credit cards, auto loans, and lines of credit. You may even be able to invest your money, and make more than you would save by paying off your mortgage! Here is some more info: Paying Your Loan Early
#3: You have to have 20% down to buy a house.
The generally accepted idea is, "I need 20% down to buy a house." There are very few cases which this is the only option. In the past there were far fewer financing options, but these days there are a wide variety of borrowing options all the way up to 100% of the purchase price. Check this page out for more details: 100% Financing
#4: If you don't pay 20% down, you have to pay mortgage insurance.
Up to half of all home loan financing is made up of combination "piggyback" loans. Depending on how much of a down payment you make, the difference can be made up with a second loan of 5%, 10%, 15%, or even 20%, with the first loan being 80%.
The cost of the second loan will be higher than that of the first, but it most cases will be less expensive than one loan with mortgage insurance. You can also deduct the interest of the second mortgage, while the amount you would pay for mortgage insurance is not a deduction.
#5: Bad credit makes getting a home loan impossible.
"Bad credit" is a relative thing. Not having perfect credit may make the loans you will qualify for more restrictive, you may be surprised by the options you have. Many lenders will offer you the option of paying a higher rate for a loan, in exchange for taking on the added risk. Being a sub-prime borrower is not the end of the world, it simply changes the lenders you will work with. Check this out for more info on credit reports: Credit Report
#6: Refinancing will force me to start the 30 year payment clock over.
It is a myth that you have to pay your refinanced mortgage over 30 years. Your lender should be able to amortize your loan with a payoff year the same as your original mortgage, and you will have a lower payment! Say you bought your home in 1997 and would be paid off in 2027. You may be able to get a new loan, at a lower rate, and have pay it off by the same date. Your payment will be lower, and you will still meet your payoff goal.
Make sure you talk to a mortgage professional to help you make the decision.
Head to this page to get all kinds of helpful info: Learning Center
