A recent survey of prospective homebuyers found that many are not aware of even basic mortgage concepts, according to Zillow Mortgage Marketplace, which conducted the study. For example, 57 percent said they were not sure how adjustable rate mortgages work, and 55 percent did not realize that rates can vary widely even during a single day. Another 34 percent said they did not know that lender fees are negotiable and vary from one financial institution to another.
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“Most people wouldn’t jump out of a plane if they didn’t know how to use a parachute, yet each year many buyers commit to the largest loan they will take out in their lifetimes without understanding essential information about mortgages,” said Erin Lantz, director for Zillow Mortgage Marketplace. “By simply spending a few hours researching how a mortgage works, and by shopping around for the most competitive rates and fees, buyers can save a lot of money.”
In addition, 42 percent said they were unaware that all consumers can qualify for home loans through the Federal Housing Administration, believing instead that these are only open to first-time buyers, the report said.
A number of studies in recent years have found that most consumers lack basic knowledge about their finances that would otherwise be beneficial to them.