Consumers are woefully under-educated when it comes to purchasing a home.
That’s the simple takeaway from a survey recently conducted by Zillow Mortgage Marketplace. Nearly half (46 percent) the respondents answered basic questions about mortgages incorrectly. About the same percentage acknowledged their limited understanding of mortgages and the process in general.
Among the findings:
- A majority of consumers don’t understand how adjustable-rate mortgages work or that interest rates fluctuate throughout the day
- Nearly half believe paying points is essential and that FHA loans are restricted to first-time buyers
- A third were unaware that lender fees aren’t flat, industry-wide rates
Perhaps some longtime industry observers aren’t surprised. But the reality is that consumer education regarding mortgages is more important than ever, from the debate over Qualified Residential Mortgages to the evolving demands on prospective borrowers.
Clearly, there’s a role for personal responsibility here. Consumers who don’t take the time to ask questions and do basic research have dug their own hole. And they’re wasting money in an water-tight economy.
The challenge for those in the lending industry is bolstering consumer education without sacrificing competitive advantage.