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Many home buyers are uninformed about mortgages, survey says

[May 4, 2011.]

 

It seems that the economic crisis and housing bust hasn't led many people to learn more about mortgage loans and the real estate market before looking to buy a home. Prospective home buyers polled by Zillow answered basic questions about the mortgage process wrong 46 percent of the time.


Low confidence about mortgage loans


The survey found that 44 percent of people admitted they were not knowledgeable about mortgages or the mortgage process. More than half (57 percent) did not understand how adjustable-rate mortgages work and 34 percent did not know that they could negotiate fees with mortgage lenders and that fees can vary. Many of those polled believed incorrectly that mortgage lenders were required by law to charge the same fees for credit reports and appraisals.


Zillow Mortgage Marketplace Director Erin Lantz, said in a statement:



"Most people wouldn't jump out of a plane if they didn't know how to use a parachute, yet each year many buyers commit to the largest loan they will take out in their lifetimes without understanding essential information about mortgages. By simply spending a few hours researching how a mortgage works, and by shopping around for the most competitive rates and fees, buyers can save a lot of money."



Compare mortgage lenders


Never begin the house hunting process without equipping yourself with as much information as you can about getting financing. While you may think the most important thing is getting a low mortgage rate, that is not true. Mortgage rates are just part of the equation. It is important to research and compare mortgages lenders and the types of loans they offer. It also is important to look at closing costs that might be negotiable or even waived. Look for a mortgage lender who is willing to explain the different programs instead of only focusing on one type of mortgage loan.


Also avoid letting your emotions take over, which could end up costing a lot of money. While it is fun and exciting to visit open houses, don't let your house hunt keep you from understanding exactly what is at stake if you pursue a particular property. Take your time evaluating houses and mortgage loans to avoid making a big mistake.

 

About Author:

Francine L. Huff is a freelance journalist and the author of The 25-Day Money Makeover for Women. She has appeared on a variety of TV and radio shows.

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