If You’re Getting a Mortgage, You Will Need to Educate Yourself

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  • I bought my first home this year, and the whole experience was full of unknowns.
  • I learned that it’s hard to find a professional whose sole role is educating you about your mortgage.
  • The answer was to educate myself and vet the sources of information I was using.

I bought my first home with a mortgage this year. The process, while relatively simple compared to many horror stories I’ve heard, wasn’t without stress.

I was taking a step into a new realm in the web of our financial systems, and I was in the dark throughout so much of the process.

I was anxious as the closing date came closer, because I felt dozens of unknowns floating around in my mind. The lender couldn’t confirm closing costs until a few days before. The title company barely reached out to lay out expectations. I was offered a HELOC — a complex and risky product — in a few sentences over email.

I was frustrated by how nebulous the experience felt. I pride myself on asking the right questions and getting into the nitty gritty of my decisions — and personal finance is my area of expertise! Why was there so little clarity?

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There’s no one to guide you through this

I learned early in my working life that consumer education is a vital element of good customer service.

When I worked as a Starbucks barista in the mid-aughts, gourmet coffee was still novel in my home in the Midwest. “Cappuccino,” to most of our first-time customers, meant the sickly sweet powder-and-water mixture they got out of a fountain at a convenience store.

My job was not only to sell them coffee; it was to educate them about the items on our menu and help them choose the one that would satisfy their craving.

That education is what was missing in my home-buying process.

A home loan is objectively more complex, riskier and more consequential to buy than a caramel macchiato. But I was more prepared as a barista to describe the ingredients, construction, flavor and experience of a macchiato than anyone involved in selling me a mortgage was prepared to guide me through the process.

For $7.25 per hour, I could tell you what “macchiato” means in Italian, but my loan officer couldn’t properly explain the risks of the introductory interest rate on my HELOC.

That’s not because she’s bad at her job. It’s because education simply isn’t her job.

The problem? Education about mortgages isn’t anyone’s job.

No professional you’ll encounter while buying a house or borrowing a mortgage is dedicated to helping the borrower truly understand the process or the product.

Mortgage brokers, loan officers and real estate agents are sales people. A financial advisor could offer guidance on the impact of a home purchase on your long-term wealth-building plan, but they can’t walk you through what to expect during the mortgage application and closing process.

Even most financial educators aren’t prepared to help people understand complex products like mortgages.

Only a handful of US states require financial education in high schools, and those requirements are thin. Students can usually graduate with one semester of financial ed, and the curriculum generally focuses on budgeting, debt management, and saving for retirement.

A financial ed course might teach you how to rearrange your resources to pay down your mortgage debt faster, but you won’t learn how to read the loan agreement or what kinds of questions to ask a loan officer to ensure you get the right product for your circumstances.

Take financial education into your own hands

If you’re looking into your first mortgage — or any of a myriad of opaque financial products — here are a few simple ways to educate yourself and feel empowered to navigate the process:

  • Google it — and check your sources. Resources like Personal Finance Insider have deep caches of information that demystify financial processes and products like mortgages. Unfortunately, lots of information you can find online is incomplete or inaccurate, too. Educate yourself with services like MediaWise, and use the CRAAP test to vet sources and ensure you’re getting solid info from qualified experts.
  • Keep public resources handy. If you Google “how to get a mortgage,” a lot of the sources you’ll uncover are sites trying to sell you on one lender or another. To eliminate bias from ad-supported content, get information from government resources. The Consumer Financial Protection Bureau has free, easy-to-navigate content about tons of financial products, including mortgages. HelpWithMyBank.gov has a searchable library of definitions and guidance to help you understand products and respond to concerns about your bank or lender.
  • Talk with a financial coach. You might be tempted to hire a credentialed financial planner or advisor, who are great for some financial needs. But a coach, certified financial counselor, or certified financial educator might be better suited to give you the guidance and education you need to navigate financial systems, because advisors and planners are biased toward wealth-building, not consumer empowerment.
  • Listen to other homebuyers’ stories. Money is incredibly personal, and no amount of education can account for any individual’s circumstances. Break the taboo around talking about money, and ask other people about their mortgage-buying experiences. Your path won’t mirror theirs exactly, but hearing their stories will at least surface some of the unknowns you can ask about and clear some of the fog that surrounds the process.

There’s a dearth of consumer education built into our financial systems (likely by design). But you have access to a world of information that can help you make financial decisions that make sense for you.

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