At Ace Mortgage Services we want to be the first to say congratulations for considering purchasing your first home. This is no easy feat and is a hard-earned accomplishment. Along with our good wishes, we want to give you a few tips on mortgages and how to avoid making 3 of the most common mortgage mistakes. The excitement of being a homeowner is an indescribable feeling, you are finally checking off part of your adult life to-do list. Owning a home no matter how big or how small is something to celebrate, but it can also be something that clouds your judgment. Once you decide that this is something you are going to do you probably have become determined to do it no matter what. You should know that while we understand your hastiness and excitement to get the keys to your first home, it’s more important to take it too slow and steady than to get it done too quickly with mistakes. Some of the commonly made mistakes for new homeowners are liar loans, reverse mortgages, and longer amortizations. These three mortgages are going to sound almost too good to be true when you first hear about them, which is when you should go running in the opposite direction. Nonetheless, if the excitement starts to make things look too good this guide is handy and ready for you to pull out to refer to. When it comes to mortgages it’s always better to be safe than sorry.
- Liar Loans
The words liar loans may sound odd; however, these loans were very popular a common during the real estate boom that began in 2007. The lenders were handing them out to everyone and anyone willing to take them, which was almost everyone. A liar loan requires little to no documentation and no verification. The loan is based on everything you tell the lender such as stated income. The problem with this is that the lack of verification caused many people who were borrowing to lie about their assets and income. People did this so that they would be eligible to buy a larger house or nicer house than they would have been able to if everything was verified. The lying was a huge problem, but there was an even bigger problem that came out of these liar loans. People who did not have any assets or any income would come in and claim they did to get access to buying a home. Of course, these people cannot afford the homes they are trying to get, causing them to eventually end up facing bankruptcy and foreclosure.
- Reverse Mortgages
Reverse mortgages are commonly seen on T.V. or heard on the radio, making them the perfect trap for plenty of people to fall into. The advertisements usually make it sound as if these mortgages can solve all of your problems when it comes to your income and becoming a homeowner. This sounds great, right? It is great until you hear some of the negatives that come along with it. First things first, this kind of mortgage is advertised to those who are ages 62 and higher. It works by using the equity of the home to make up for the income stream. This equity is given to the person who is hoping to become the homeowner in small amounts at a time. Nonetheless, some of these negatives are that there is almost always an extremely high upfront cost to pay. These costs show up in attorney fees, title insurance, mortgage insurance, and more, which all result in the equity on the home being essentially diminished. This defeats the purpose because if there is no equity then there is no ownership. The home reverts to become a property the bank owns.
For all of your homeownership questions about mortgages, Ace Mortgage Services is here to be a guide for you. We are the premier leader in all things homeownership and mortgages and can make sure you are pointed in the right direction. When it comes down to it, you need to watch out for those who try and sell you on liar loans and reverse mortgages. For any other questions, you may reach out to us at (408) 244-1190.