- Posted by Jeremy Bachmann
- loan process
Knowledge@Wharton recently explained recent research that shows just how bad we are at differentiating between good and bad advice when we're anxious. It seems the more worried and uncertain we become, we become more open to advice and less discriminating about the source.
This is important to keep in mind when you're in the middle of the home loan process - be it buying your first home, refinancing, or even seeking a loan modification from your lender. The home loan process can almost be the textbook case of worry and uncertainty; it's complicated, involves large sums of money, and the stakes can be high if you're bidding on a new home or negotating to stay in your current one.
At their most vulnerable, borrowers are a risk for scams or mortgage fraud. More commonly, anxious borrowers simply may not be getting the best deal. Roughly half of lower income consumers only obtain a quote from one lender when looking for a mortgage, according to a recent Fannie Mae study. The same study found low income borrowers are also much more likely to accept the recommendation of their real estate agent or mortgage broker when choosing a lender.
What You Can Do To Improve Decision Making
- Shop multiple lenders. Try to get a quote from at least three lenders. The Federal Reserve puts together a mortgage shopping worksheet that you can use when gathering quotes.
- Check licenses. The Nationwide Mortgage Licensing System (NMLS)has a free service for consumers to confirm that the financial-services company or professional with whom they wish to conduct business is authorized to conduct business in their state.
- Do your own research. Ask for references and do some online research - knowing online sources can often be less than reliable, too.
Most importantly, stay relaxed. The researcher of the anxiety study "suggests that people refrain from making major decisions until they are in a relaxed state and are able to clearly reflect on the matter at hand. In addition, he adds that the key element to conquering anxiety is self-confidence." If you follow the above steps, you'll hopefully feel more confident and relaxed that you're making the right decisions about your mortgage.