Why Improve Mortgage Knowledge?
Why improve mortgage knowledge? Isn’t everything available on a google search? A recent google search on mortgage yielded more than 1 billion hits. As anyone knows, google results over time have been modified to reflect those paying the most to advertise dominating the first page and multiple early pages of results. Those results likely tell you little.
Multiple recent surveys show that many buyers regret the purchase. A common element in the regrets cited lack of mortgage knowledge as a prime culprit. 17% of young home buyers regretted their purchase according to a recent Zillow survey. More than 25% had regrets specifically about their mortgage because they said they rushed through the process. A separate study just published noted that 64% of millennials have regrets. Readers of Winning Mortgage, Winning Home haven’t expressed any regret since they come prepared. Please share this with friends www.mywinningmortgage.com
A Competitive Market
Until August of 2022, for the last 2 years buying has become very competitive. Buyers felt pressure to make an offer with a short contingency or no contingency. They felt pressure to waive inspections or bid over asking price. Real estate agents saw homes command more than 200 offers in a week and prices 30% or more over asking price. These anecdotes may be anomalies as the norm doesn’t end up as competitive. It is highly likely the winning bidder will come to regret the purchase unless they sold in a high price market for a huge number and re-bought in a lower price market. as of August, the tide turned. Homes sit with no offers. Initial overpricing gets slashed repeatedly, even weekly or more often.
Remember, a low interest mortgage can’t make up for a vastly inflated purchase price. A buyer paying $300,000 for a $250,000 house to get a 3.00% mortgage instead of waiting and paying $250,000 for the home with a higher rate, 3.50% or higher rate mortgage, loses. The difference in a $250,000 mortgage from 3.00% to 3.50% adds up to about $25,000 in interest over 30 years. The mortgage will be based on the appraised value of the house, not what the buyer pays. The available mortgage may be the same for either purchase price. In addition, this assumes the buyer stays in the house for 30 years. Staying in the home for 10 years and the buyer only saves less than $10,000 in interest.
The Wrong Mortgage
According to this recent survey, Zillow speculated that buyers may have gotten the wrong mortgage. Almost 30% said the rates and payments were too high. Although more than 50% shopped online for a mortgage, they didn’t know what they didn’t know about financing options and the best fit. Most internet mortgage sites seek to sell you a mortgage loan. The less you know, the higher the price. Trade-offs exist on rate, cash, price, closing costs, PMI and other loan requirements. winningmortgage.com doesn’t seek to sell you a mortgage. It only seeks to sell you a book on getting the best mortgage. It’s only 10 bucks and might save you thousands. Why not buy a copy or gift a copy of Winning Mortgage, Winning Home? Nearly one-third of the survey participants noted below in a FiServ survey ended not satisfied with the process. Avoid being part of that statistic.
Choosing a Lender
According to a contemporaneous survey by FiServ:
- 50% of buyers chose the lender based on interest rate
- 39% of buyers cited low fees as being important
- 37% of buyers cited customer service and lender reputation
- 29% cited a knowledgeable lender staff
- BUT 31% of applicants weren’t satisfied with the process, the paperwork, poor communication, and costs and fees
Almost one-third of these borrowers chose a lender based on recommendations from the real estate agent! Did the real estate agent get the best deal for the buyer? Was the mortgage company reference a friend or partner? Did any of these buyers even ask whether this got them the best loan to fit their need? Likely, these buyers had no idea what to do, where to go or what they didn’t know. Perhaps there is correlation between the 31% who didn’t like the process and the 33% who went with the agent’s recommendation? Why improve mortgage knowledge indeed!