A new Zillow Mortgage Marketplace survey revealed consumers know very little about how mortgages work.
At the moment, many ARMs have adjusted lower, thanks to record lows for many mortgage indexes, such as the LIBOR.
Even worse, 34 percent of respondents don’t realize mortgage lender fees are negotiable and vary by institution.
Consumers seem to believe that lenders are required by law to charge the same fees for things like credit reports and appraisals.
Additionally, 55 percent of those surveyed don’t understand that mortgage rates change throughout the day, just as stock prices rise and fall.
And 45 percent of prospective home buyers believe they should always buy mortgage discount points when obtaining a mortgage.
Unfortunately, it doesn’t always pay to do so, as it’s dependent on how long you plan to stay in the home (or with the mortgage).
Most people don’t keep their mortgages for the full term, let alone a decade.
More than a third (37%) believe pre-qualifying for a mortgage means they’ve secured financing, though this is far from the truth (pre-qualification vs pre-approval).
Consumer education is paramount to solving the ongoing housing crisis, and the very reason this site was created.
So if you’re shopping for a mortgage, do plenty of research (months of it) before making one of the biggest financial decisions of your life!