10 Current Myths About Residential Mortgages

1. The current credit crunch means only those with impeccable credit can get mortgages.

This canard, perpetrated by alarmist media reports, could not be further from the truth.

2. Mortgage companies are fly-by-night operations.

Like any field, a few bad apples can ruin everyone's reputation. There are billion-dollar mortgage companies with sterling records, often with decades of experience. These are the best companies to consult regarding residential mortgages. The test of quality is a test of time.

3. Victims of the foreclosure crisis will never be able to get a residential mortgage again at a competitive rate.

This is one of the most pernicious rumors in existence. Mortgage companies evaluate changes in circumstances such as income or just passage of time as well as good-faith efforts prior to foreclosure. People who have been cheated by unscrupulous lenders with adjustable rate mortgages may find the little-to-no future penalty.

4. Mortgage rates vary little from firm to firm.

Not true. Larger mortgage firms are able to leverage national operations to provide the best financing for their customers. Like any other field, economies-of-scale make a difference for lenders and borrowers alike.

5. Home-equity loans are a bad idea with decreasing property values.

Reasons for home-equity loans vary widely. In addition, current property values may be artificially
depressed in the current economy. People considering a home-equity loan should evaluate
other sources of credit, consult with an accountant, and talk to a qualified residential mortgage company for advice.

6. Since the housing "bubble" burst, the property is no longer a valuable investment.

In the long-term, the property is one of the safest and surest ways to invest your money. In addition,
it provides a home for years of enjoyment, recreation, raising a family and retirement. Speculating in real estate, on the other hand, requires expert knowledge and carries major risks.

7. Complex financial instruments related to residential mortgages, or derivatives, caused the current collapse of our economy.

While lack of regulation and misunderstandings regarding derivatives provided a spark leading to our current situation, many other factors are far more serious. The freezing of the credit market, a downturn in consumer confidence and a negative rate of savings have all contributed far more heavily to our current recession.

8. The promotion of homeownership for minorities was misguided.

Homeownership always has and always will be an American dream and should be offered to everyone. Our current crisis arose when unscrupulous lenders did not inform minorities about the impact of adjustable rate mortgages. That's one more reason to do business with established residential mortgage companies.

9. Commercial and residential mortgages are interchangeable.

The residential mortgage market offers several unique structural, legal and procedural opportunities and restrictions. A company specializing in residential mortgages should always be preferred.

10. Residential mortgage companies should be evaluated solely on their rates.

Untrue. A qualified residential mortgage company can suggest several ways to ensure you get the home of your dreams and provide advice regarding strategies such as pre-qualification, pre-approval, rate locks, dual agents, home inspections and insurance.