Buying and financing a home is the most important personal financial decision we will make in our lifetime. Over a lifetime, the average homeowner may pay one-half of a million dollars or more in mortgage interest, many times more than any other single expense.
Yet, the process and substance of home finance remains a mystery to the average American. We tend to know much more about our automobiles than we do about the mortgages that make our home purchase possible. Because of our unfamiliarity, many Americans have no idea if they are making the right decision in relation to their personal financial situation. This is because we tend to make up to ten essential mistakes when involved in the home buying process.
We do not have a relationship with a loan officer. An individual formulates a multitude of professional relationships in his or her lifetime. These include a doctor, attorney, accountant, financial planner and even a car dealership. We tend not to have a relationship with a mortgage lender because the need for the home finance transaction arises much less frequently than our trips to other professionals such as a tax preparer. With the advent of adjustable rate mortgages and refinances, chances are you will need the help of a professional more frequently. If you have no relationship with someone qualified, you are much less likely to find qualified advice when the need arises.
We have no idea whether the lender we pick is qualified. Since we do not tend to have long-term relationships, we do not tend to shop for the right reasons. We know how to ask about a company’s rates, but not the background of the entity with whom we are dealing. For example….
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