Zillow Mortgage Market recently reported some alarming – but not surprising – news.
Buyers still don’t know how to do mortgage math.
■ 44% admitted they were not confident in their comprehension of the mortgage process;
■ 57% did not understand how adjustable rate mortgages (ARMs) work;
■ 34% were not aware loan terms vary from lender to lender, lender fees are negotiable and different lenders charge different fees for appraisals and credit reports;
■ 55% did not know mortgage rates are constantly fluctuating;
■ 45% believed they should always purchase mortgage discount points (prepaid interest) regardless of the length of time they intended to keep their home;
■ 37% were under the impression that pre-approval for a loan is synonymous with obtaining permanent financing; and
■ 42% believed Federal Housing Administration (FHA) loans are only available to first time homebuyers.
In a marketplace where (in California) it is possible (perhaps for the first time since, what, 1953?) to buy a single family home and rent it out with POSITIVE cash flow, investors and/or Joe and Martha Buyer still don’t grasp mortgage fundamentals.
So, brokers and agents should not despair. There is still a client base out there that NEEDS your help.