Zillow: Homebuyers Need Help When It Comes to Mortgages
Recently, more and more evidence points to the need to educate and counsel homebuyers before they purchase a mortgage.
Real estate website Zillow yesterday released results from its Mortgage Marketplace Survey, which found that one-third of homebuyers do not fully understand the basic terms of a mortgage, like down payments, lender rules, and mortgage rates. According to the survey, around 25 percent of homebuyers incorrectly believe that they are required to close their loan with the lender that pre-approved them. In reality, prospective homebuyers should shop around for a loan that fits their unique financial needs rather than always go with the first bank that pre-approved them.
The survey also reported that one in five – or roughly 14 million homeowners –believe that underwater borrowers are unable to refinance their home loans. This is simply not true – to date, a significant portion of the 2.3 million homeowners who refinanced their mortgages via the Home Affordable Refinance Program (HARP) were underwater. Information about HARP, which has been extended through December 2015, is available by speaking with an HPF counselor at 888-995-HOPE (4673).
In addition to the evidence provided in the Zillow survey, last week’s HPF blog post discussed a recent academic study published by the Yale Law Journal, which found that, when presented with mortgage documents, homebuyers’ eyes focus more closely on language that is easy to comprehend rather than on the more complicated information. This leaves homebuyers’ susceptible to agree to terms they don’t understand, which could potentially harm them in the long run.
As with any other important financial decision, HPF urges homeowners to do their homework before taking out a mortgage. Taking the time to fully understand the terms of your mortgage and what the details of your loan entail is one of the first steps to take on the path to sustainable homeownership.