Have you noticed all the media attention being given to the various new types of mortgages that have become popular in the last five years or so? Many of these mortgages make it easier for people to buy homes. In some cases, people get more house than they thought they could afford, and that is good, especially when that extra bedroom is needed for a growing family, but in other instances, Some people perhaps buy more house than they need or can afford.

While it is true that our low interest rate environment has fueled the real estate market and made it possible for more people to achieve the goal of owning a home much earlier in their life than ever before, credit is also due to the introduction by banks and aggressive mortgage companies of a lot of new mortgage products, including: low start rate loans, interest-only options, deferred interest loans and a proliferation of no-money-down loans.

Stories about unqualified buyers who have been led astray by unscrupulous loan officers or real estate agents are picked up and exploited by the media, but as far as I am concerned, the whole story is often not heard. As a mortgage professional, I work with other professional men and women who take their careers and their client relationships seriously, and I am confident that most companies have a high code of ethics and have trained their loan officers to make sure that each client is making an informed decision and is entering into the purchase of a new home or refinancing of an existing home with a maximum amount of confidence and knowledge.

Of course, every decision is not the right one, and often the passing of time alone changes a person’s needs, qualifications, and circumstances. No one has control over this, and there are no crystal balls to help make personal or business decisions.

Here is a typical example in my experience: It’s time to buy a house. Husband and wife are excited and anxious to make the move. They want to upgrade their living style, space and perhaps location for job or school reasons. The market is hot, houses do not stay on the market too long, they realize they need to act quickly and be prepared to pay more than they expected. The mortgage broker gives them all of their choices of loan programs; among them are the conventional 20% down fixed rate mortgage.

But now they realize they will also want to fix up the house once bought, so putting less money down is an attractive idea. They are also very optimistic about their job and income future. Things are going well, and raises and promotions are in sight, so they decide to take a chance on a lower interest rate adjustable product to help keep the payment down to where they need it to be. One year later, interest rates go up, and the raise in income did not come through.

You can see that this couple made their decision based on their needs and financial capabilities at that time. The mortgage broker presented them with all their options and discussed each product’s benefit and potential hazards. It is a professional’s job to do the research, present the facts and help their client evaluate the various what-if scenarios. They cannot predict the future, nor should they speculate about their clients personal lives. So is it possible that we simply have too many choices and it is in our nature as humans to select the path of least resistance? Personally, I do not think so.

I believe that choices empower people and drive the marketplace into staying competitive. It is we as consumers who need to do our part and take responsibility for ourselves and our decisions. You need to find the right professionals to help you in any financial decision you make, but at the same time, we all must be prepared to live with and work out the choices we make in life. However, I do have advice for potential homebuyers and refinance candidates, and that is simply to trust the person you are doing business with and to ask as many questions as you can. A true professional will always take the time to help you understand what you do not know. The following are a few other good tips and practices.

Phone solicitation: There are groups of unethical mortgage telemarketers who call homeowners and offer a “free survey” of your “financial and debt” picture. In reality, the vast majorities of these callers are reading from a script and have little to no real experience in the mortgage field. The operators of this type of solicitation Company move from one hot industry to another year after year, leaving a wake of unsatisfied clients behind them. They were selling alarm systems last year and probably will be selling frozen beef next year. This type of mortgage marketing is an embarrassment to the real professionals in the industry, and consumers should beware.

You don’t need to receive these unwanted phone calls. Simply add your name to the national Do Not Call Registry, and the calls should stop. We provided a link to their website here: https://www.donotcall.gov/

Direct mail: Unfortunately; there is no such thing as a Do Not Mail list, and if you are like me, you receive all kinds of mortgage offers and solicitations. (Some sound so good that even I have been tempted to call!) Keep in mind that a letter in the mail with an offer that is too good to be true is usually just that — not true. Read everything carefully, even the letters that look like they are from your current mortgage holder, and do not be tempted to jump at the offer. A good direct mail piece should give you timely or practical advice about the product or service the company is offering. This is a sign of honesty and integrity on the part of the solicitor.
E-mail spam: If someone is spamming you about a mortgage, how much trust do you really have in them to deliver a worthwhile financial product? Spammers are often hiding behind a curtain of deceit, using foreign and untraceable URLs and phony names. You can be sure no one took the time to sit down and write you personally about a mortgage.

When you are ready to buy a house, or when you want to refinance your home, be sure to get a referral from someone you trust — an attorney, accountant, financial planner, or good friend or relative who has gone through the experience. Remember, the more you know, the better off you are!

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