For people looking to secure a mortgage loan for their new home or a refinance, there are today more options than ever before. This is especially true with the advent of internet banking and home loans. As computer literacy increases, so do expectations of immediate gratification. My concern is that “click happy” mortgage shoppers, in their haste to find a quick approval, will ultimately sabotage their best interests by racing through a process that requires deliberate, informed decision making. Others are drawn to internet mortgage loans because they wish to avoid human interaction. Obtaining financing for one’s dream home can be an intimidating process, especially for the first time homebuyer. People tend to fear what they don’t understand. Many also tend to hold their tongues, not questioning what they don’t understand. To make matters worse, many honest and sincere mortgage professionals add to their clients’ uneasiness by speaking in industry jargon without realizing that they are not being understood. By using an automated loan process, timid shoppers, while avoiding having to ask what they feel are embarrassing questions, often place themselves in the wrong loan program. I have listened to many stories of borrowers left ultimately unfulfilled, sometimes bitter, after using an automated process to obtain financing. Immediate gratification often will lead to longer term stress and regret. Everybody has different financial scenarios, needs, and goals. How will an automated system understand what these are? Furthermore, will the automated method enable the consumer to evaluate their credit report, understand the content of the numerous required disclosures, or ask any related questions that come to mind? This type of information is vital to structuring an individualized home loan appropriate for a prospective borrower. Financing a new home purchase or refinancing a current home can be confusing and, yes, even tedious. There is an understandable temptation to cut some corners and follow the path of least resistance. However, as with anything important in life, the necessity of good counsel can not be over emphasized. None of this is to say that the internet does not have value for the mortgage shopper. To the contrary, valuable information about every aspect of mortgage lending is available online to those who wish to learn. I especially recommend the U.S. Department of Housing and Urban Development’s website (www.hud.gov). This contains a wealth of information and is particularly useful in educating the public about predatory lending (more on that in future columns). Before making an important decision, it is never a bad idea to get online to educate oneself. Of equal importance is having the option of asking questions and speaking with a trusted advisor who will listen and provide options and a degree of accountability. Michele
Francis is President of Beechwood Capital Company, LLC. You can
reach her by calling (516) 935-5600 x 13 or by emailing her at mrf@bwdcap.com.
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