When it comes to hard money loans, there have been a lot of misconceptions in people’s minds, and with all the advancements going on in the real estate industry, this might become concerning.
As home prices keep on skyrocketing, it seems like everyone just wants to get in on the action, but the misconception prevents people from connecting hard money lenders Miami to get the mortgage for their dream investment.
So, let’s take a look at the seven common myths and separate them from the fiction made by people.
- You need a great credit score to get a mortgage
One of the most common myths is that only those who have the best credit score will be able to own a home in Miami.
While no doubt a high credit score can secure you a better interest rate, it is not the most important factor. Lenders also consider a range of factors, and there are certain programs specifically designed for those with less-than-perfect credit.
- You need to have a 20% down payment
Having the idea that you need to pay a 20% down payment is another common myth that needs dispelling. While no doubt putting on 20% can be helpful for you to save yourself from paying private mortgage insurance, there are numerous other programs in Miami that allow for a much lower down payment.
For instance, you will find that FHA loans can go as low as 3.5%. In fact, there are some conventional loans that offer down payment options as low as 3%.
- The best mortgage is the one with the lowest interest rate
While no doubt you can find a low interest rate quite attractive, it is not the only factor you need to consider. When choosing a mortgage, there are other elements, such as loan terms, fees, and whether the rate is fixed or adjustable.
They all play a crucial role in determining the overall cost of your mortgage. So, it’s crucial that you look at the APR and not just the advertised interest rate before seeing the complete picture.
- Pre-qualification ensures you get the mortgage
Before you actually start looking for the property, it is important that you contact hard money lenders in Miami and get pre-qualified.
It is an excellent first step in the new home-buying process, and it gives you an idea of how much you might be able to borrow. Further, there is no guarantee that you will get the mortgage.
Keep in mind that pre-approval is a more thorough process and carries weight. But even then, the final approval would depend on a detailed examination of your financial situation and the property appraisal.
- Fixed rate mortgage is always the best choice
Just so you know, fixed-rate mortgages offer flexibility and stability because the interest rate here remains the same throughout the loan’s life span. However, they are not universally the best choice for everyone.
If you plan to move or refinance within a few years, then opting for an adjustable-rate mortgage might offer a lower initial payment. It is all about matching the loan type to your circumstances and plans.
- You cannot pay off the mortgage early
Some people believe that mortgages are strict contracts that prevent you from making early payments. While some loans also have prepayment penalties, but not always. When you pay off your mortgage early it can save you a significant amount in interest.
So make sure you always check the terms of your specific mortgage, and if early repayment is the goal, then make sure you look for a loan that does not take the penalty.
- Once you get pre-approved, you are locked
Pre-approval, no doubt, is quite an important step to showcase to the sellers that you are serious and understand how much you can afford. However, this does not bind you to the hard money lenders in Miami.
You are free to shop around for better rates and terms. The mortgage process is quite competitive, and exploring your options can help you save a lot.
Conclusion
If you are looking for hard money lenders in Miami who can provide you with great options then better get in touch with Private Capital Investors for easy assistance.
Their professional understands the needs of the hour and will be able to guide you in the right direction.
No matter the amount of financing you are looking for or your specific goal, the experts will be there to get the best deals possible and ensure you have easy ways of getting a hard money loan.
