There are a lot of myths and superstitions surrounding the world of property finance.

1) "My neighbor got 6.25% a month ago when he refinanced. I should be able to get it as well."

Wrong, wrong, wrong. The amount of factors that go into a loan for a borrower are numerous. Loan program, credit score, verification of income, cash reserves, mortgage history, and even the date you apply for your loan can all push either this way or that way on what interest rate you may be eligible for.

One mortgage is always better than having a 1st and 2nd mortgage.

Often times the rate for a single mortgage will look more appetizing than having 2 mortgages, one being several points higher on the 2nd mortgage. However, it is important to look at the 'weighted average' in order to figure out just what sort of deal you are receiving, and also consider mortgage insurance costs. To figure the weighted average of an 80/20 loan, multiply the 1st mortgage rate by .8 (80%). Record that number. Then multiply the 2nd mortgage rate by .2 (20%). Record that number. Then add those two numbers up and you will see, roughly, what the 'weighted average' of those two rates are. After factoring the rates and payments, and mortgage insurance, many times the 1st and 2nd mortgage combo scenario is the better option.

"It's not the interest rate that is important, it's the monthly payment."

For some people, monthly payment is indeed the overriding factor. They have a fixed amount they cannot go over. But in the long run, a low monthly payment with a higher interest rate (like with an interest only mortgage or an option ARM) may cost you a lot more. Also, it is easy to lower the monthly payments on credit card debt or car loans, simply by extending the term into a 30 year mortgage. Again, you may end up paying a lot more in the long run. Always review your situation with a good financial or mortgage planner.

- All debt is bad so it is best to pay off my mortgage early or as soon as possible.

There is good debt and bad debt and there are many reasons why keeping your home mortgaged makes good financial sense. Contact a mortgage professional such as myself to see what works best for your particular situation and financial goals. Remember one thing about home equity: it is not particularly safe, it is not liquid and has no rate of return. Please feel free to call me so I may explain this concept further.

"A No Point Mortgage Is Cheaper Than a Mortgage With Points"

This certainly sound logical, but is certainly false.
When a borrower opts to take a mortgage loan without any points, he/she is paying a higher interest rate. If a person plans in staying in the same mortgage for more than a few years, it usually makes sense to pay a point and get a reduced interest rate. Over the course of those few years it will actually cost less to pay the point (1% of the loan amount) up front rather that paying a higher interest rate.

"You Should Only Refinance If You Lower Your Rate By 2%"

This is a common misconception.

There can be many benefits to refinancing including:

1) Paying off high interest rate credit card bills, thus resulting in overall lower monthly payments.
2) Taking cash-out for home improvements.
3) Debt consolidation.
4) To pay off any liens or judgements that may be against you or the home.
5) Taking out cash against your primary home in order to buy a second home or investment property.
6) To change the term of the loan (ie. Going from a 30yr to a 15yr)
7) To go from an adjustable rate to a fixed rate.
8) And many other reasons.

Why can't you match the rate in the Sunday paper? - Rates are based on the FNMA mortgage backed bonds. Bonds normally trade each day between 8 AM and 5 PM. Once the bond market is closed, rates usually can't be locked. This protects the banks from bad news that could occur over the weekend that could affect bond prices. If nothing happens over a particular weekend or even overnight from the previous day, then being able to obtain the rate quoted in the Sunday paper only depends upon your credit, your income, and your current debt load. Contact Charles Light at 888-920-0123 x302 to help you determine the best mortgage that fits your current financial needs.

"I can save a lot of money with the Option ARM paying only 1% interest."

FALSE. The Option ARM loans offer unrealistically low initial payment. However, the fully indexed rate is usually much higher than non-option ARM. In the long run, the borrower pays much more interest than the non-option ARMs. The option ARM is a good choice for some borrowers, but not for most of the borrowers.

A common mortgage myth is that you need to put a lot of money down to buy a home.
Not true! You can buy a home and obtain financing for the entire purchase price. Your only out of pocket expense would be closing costs.
You can even go further and obtain seller concessions to pay most of your closing costs.