According to a survey recently administered by Bankrate.com, apparently 30% of US homeowners have no idea what type of mortgage they own. One of the biggest investments a person will ever make and they donâ€™t understand the terms of the loan, or the implications of how their monthly payments will change as interest rates fluctuate.
It frustrates me to know that mortgage lenders and real estate professionals took advantage of individuals that didnâ€™t know what questions to ask and were guided to products that werenâ€™t necessarily in their long term interests. Of course, not all lenders and agents took advantage of inexperienced buyers, but those that did tarnish the image of all real estate industry professionals.
When buying a home, people should understand what they are buying and all of the costs involved. This includes transaction costs, potential resale value of a home and how value could be improved, long term cost considerations such as rising taxes, changing interest rates, etc. Consumers need to make informed decisions because a misinformed decision could potentially be financially devastating down the line. If you feel that your advisors in the home buying process arenâ€™t fully answering your questions or straight forward in their responses, call them out on it. Just as you would do with a doctor, get a second opinion.