Homebuyers Clueless About Mortgages

According to a Zillow survey of more than 1,000 current and prospective homeowners, buyers were wrong almost 33 percent of the time when asked fundamental questions about mortgage terms, financing, and choosing a lender. The research revealed that 34 percent of buyers do not know the definition of “annual percentage rate,” and 31 percent do not realize mortgages can be had with less than a 5 percent down payment. Another 25 percent believe they must use the lender that gave them a preapproval, and 34 percent believe there is a law requiring lenders to charge the same fees to all borrowers for such products as credit reports and appraisals. Experts believe the survey could prevent buyers from achieving homeownership or make it difficult for them to compare loans. As for existing homeowners, the survey shows that 20 percent were unaware that underwater mortgages could be refinanced at lower rates, and nearly 33 percent had no idea that they might not have to wait the full seven years to purchase another home following a foreclosure or short sale. | Read More