Homebuyers. Francis Bacon said, “Knowledge is power.” But a recent survey just released about home buyer’s knowledge about mortgages and mortgage lending reveals that a lot of us have something to learn and it’s costing us money.
“Time is money” said Benjamin Franklin. If you are having any thoughts of buying or refinancing a home now is the time to learn about financing.
Zillow Mortgage Marketplace, operated by Zillow, Inc surveyed 1,000 homeowners and homebuyers and asked them basic mortgage lending questions. 32.5 percent of the respondents answered the questions incorrectly. As surprising as that may be it is still a great improvement over the same questioning two years ago. In 2011 a whopping 46 percent of those surveyed answered basic mortgage lending questions wrong.
Homebuyers: Rates and Fees
A third of those surveyed believe that all banks are required by law to charge the same rates and fees, including appraisals and credit reports. They aren’t and they don’t. A quarter of the homebuyers believe they can get the best rate at the bank they normally do business with and also believe they are obligated to close with the lender that first pre-approved their loan.
“All too often buyers focus on negotiating a lower home price and ignore the importance of finding the right loan. If a home buyer can lower their interest rate by even half a percentage point, they can not only increase their purchasing power, but save thousands of dollars over the life of the loan,” said Erin Lantz, director of mortgages for Zillow.
Mortgage rates change during the course of a day but half of homebuyers do not understand that. The survey discovered that 34 percent do not know what the term “annual percentage rate” means.
The Zillow survey on homebuyers knowledge of mortgage lending makes something very clear. Real estate brokers and mortgage lenders should never assume customer knowledge and should always be in the education mode. Most of the stress generated during the buying process is due to not understanding the buying process. This stress can be greatly reduced if the buyers and sellers are fully informed from the outset and during every step of the way.
More findings show that 34 percent of first time homebuyers didn’t realize that a large down payment is not always required. In fact down payments of 5 percent or less are available. Zillow Mortgage Marketplace reports an increase by 570 percent of loan requests of 5 percent down payment or less.
Homebuyers: Jumping out of a Plane
“Most people wouldn’t jump out of a plane if they didn’t know how to use a parachute, yet each year many homebuyers commit to the largest loan they will take out in their lifetimes without understanding essential information about mortgages,” said Zillow Mortgage Marketplace Director, Erin Lantz.
Knowledge is power and in the case of mortgage lending knowledge is money too. Take the time to research mortgage lending. Ask your real estate broker and mortgage lender to explain things to you.
Margaret Hitchcock of Hitchcock Realty is an experienced Realtor with many years in helping real estate homebuyers and sellers through the process. Margaret has successfully closed on conventional loans, VA loans, FHA loans, foreclosures, short sales and even for sale by owner (fsbo) transactions.
Just like the wide variety of loan and transaction types, the Crystal Coast of North Carolina offers a diverse geographic and marine environment with homes suited to each condition. Some of the locations in Carteret County include Morehead City, Atlantic Beach, Emerald Isle, Swansboro, Beaufort, Newport, Bogue Banks, Havelock, Downeast, Cape Lookout, Beaufort Inlet, Bogue Inlet, Core Sound and the Neuse River.
Contact a seasoned professional real estate broker. Call Margaret Hitchcock today at (252) 269-2893 or visit her online at HitchcockRealty.net
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