I’m not sure if you have seen the most recent report showing our countries savings rate, but it came in at -.08%. Before you think that is bad, it was previously -1.2% so we are making some progress. The reason I bring this up is everyone is so focused on getting the very best rate on their mortgage so they can save money and so far, they haven’t saved any money! Consumers are far more educated than they have ever been when it comes to getting a mortgage so you would think the opposite would be true. There are a number of factors of why the savings rate in this country is negative, but when it comes to getting a mortgage-- for most the single biggest financial transaction of their life--there are so many choices now that I believe many people make the wrong one. Before you could focus just on rate because you had a 30 yr mortgage and a 15 yr mortgage. Now , you have ARMs, interest only ARMs, interest only fixed rates, Pay Option ARMS, 40yr mortgages, 50 yr mortgages, etc. The mortgage is now a tool, not a necessary evil. If that tool isn’t used correctly it could do more harm than good. Just ask people with a subprime ARM! I’m not suggesting that everyone with a subprime ARM got a raw deal because the fact is that most of those people would still be renting and the percentage of people defaulting is still pretty small compared to the overall number of people with subprime loans. However, there were many people steered into these loans when another option would have better suited them. The bottom line and my point, a great rate on the wrong mortgage can be far more costly than a good rate on the right mortgage.
Eric Parsons, Senior Mortgage Consultant ACA Mortgage |
