Many hate their mortgage. They hate working hard everyday, only to make that BIG PAYMENT at the beginning of the month. For the millions of homes in adjustable rate mortgages, they hate not knowing how much their mortgage is set to increase on a month to month or yearly basis. So, "What typically happens when a person hates something?" They avoid it! I'm not talking about avoiding their mortgage payments, although some do that. I'm talking about how many homeowners avoid having an intimate relationship and understanding with the type of mortgage they currently have and whether it is still (or ever was) the right type of mortgage for them!
Love takes time, devotion, an understanding, patience, open and willingness to learn and listen and setting the course for a happy future. I pose you apply those fundamentals to your mortgage, and here's why!
A poll commissioned by BankRate.com in 2007 showed that 34% of homeowners, when asked, "What type of mortgage do you currently have?" were clueless. 1 out of 3!
Source: Bankrate.com 2007
That number is very disturbing to me, especially with the vast changes that have taken place in the housing and mortgage markets since they purchased or refinanced a few years ago. I'm especially concerned with those homeowners in adjustable rate mortgages with "teaser rates", which are set to "reset" to a much higher payment and those in "Option Arm", "Pick a Payment" or "4 Payment Option" loans, which allow for negative amortization (where the minimum payment will actually increase your mortgage balance, because you are paying less than the actual interest due to the bank!)
During the refinance and housing boom we experienced over the past few years, many "mortgage professionals" entered into the mortgage industry. Why? The answer is simple; Money! Salespeople from every profession you can think of were showing up at the doors of mortgage companies across America to get in on a "piece of the action". A few mortgage companies I witnessed first hand (which are now out of business), were little more than a license on the wall and hundreds of telemarketers. These telemarketers had little knowledge of the business that were answering phone calls, simply quoting rates and "winging it!" Scary stuff! Especially for the misguided homeowners that took a person's word for face value with little credibility. I vowed to never run my mortgage companies like that.
Now, many of those "mortgage professionals" are no longer in the business, because the phone calls aren't pouring in as they once did. Much of the mess that we have today is due to the "blind leading the blind". Borrowers don't understand mortgage financing and the "mortgage professionals" and telemarketers learned jargon to sound professional, but still had little understanding about the mortgage products they were selling to people. My dad has been in the mortgage business for close to 30 years and he still doesn't claim to know it all. How can a person that has been in the business for a few months replace that?
I propose that many of you, once again, "rekindle" your relationship to your mortgage. Pull out the old paperwork you signed a few years ago and try to avoid. Call a true mortgage professional, who will help you to understand the type of loan you currently have and whether it still is (or ever was) the right loan for you. Within the same poll referenced above, people were asked, "What do you plan to do when your ARM loan readjusts?" Here are the results:
Source: Bankrate.com 2007
I have always believed in empowering my clients to make better, sounder decisions, with regards to their mortgage. When a refinance or purchase transaction is over, the borrower should walk away, knowing exactly what their mortgage is about. Removing your fears of the "unknown" will once again help you to love the benefits of homeownership. Interest rates have dropped significantly, especially on 30 year fixed rates. Feel free to give me a call; I'd love to spend the time and go through your scenario with you!
Scott Gormley
Broker/Owner
Oak Valley Mortgage/Beach Town Mortgage Inc.
Direct: 530-592-8362
"You Find the Perfect Home, We'll Find the Perfect Loan!"
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Hey Scott, do you ever think you'll see the day when people start burning their mortgages like our Grandparents did? Those people knew what their mortgages were, who their mortgage lender was and worked really hard to pay those things off. Different days I guess.