I have a collection of sayings from this wonderful American bard. This is one of my favorites:

There are three kinds of men: The ones that learn by reading. The few who learn by observation. The rest of them have to pee on the electric fence and find out for themselves.

When it comes to mortgages and homebuying, fewer and fewer fall in the first category. My publisher, John Wiley & Sons, just reported to me that the sales of all real estate books are off 75% from a few years ago. The sales of my book are off just as badly, maybe worse.  In my local two-story Barnes & Noble store, a mere 4 feet of shelf space is devoted to these books compared with 12 or 16 feet a few years ago.

Learning by the second method could be helpful, but it is nearly impossible to find someone buying a home and follow him around and try to learn from him as he does it.  No one does that and, unlike the obligatory "birds and bees" discussion, it doesn't seem to be a task that parents take on.

Most people seem to be in the third category. Obviously prominent among them are those who bought a home they could not afford, got a toxic mortgage, or more likely, both.  Millions of those people have been foreclosed upon or are going to lose their homes in the next few years. And I can practically guarantee you that almost none of these people read a book about mortgages and homebuying beforehand.

These people went through the process not even realizing at the time that they made a number of costly mistakes. In most cases, as escrow closed they were still totally clueless.  They didn't read or understand the purchase contract, the escrow instructions, the loan disclosures, the loan documents, or the final closing statement.  They just worried about, "When do I get the key?"

 

So where did they get their information?

Nowhere.  They had none. In reality, they had an encounter with an electric fence. They just didn't understand it at the time. In fact, many of the forces that got them into trouble – specifically greedy real estate agents and slimy mortgage loan officers – not only didn't want them to understand, they went out of their way to make sure that the people DIDN'T UNDERSTAND what they were doing.

Had the homebuyers really understood the implications of what they were signing, they would have aborted the transaction and no one would have made any money.

So whatever you do, especially when buying or refinancing a home, get educated about it. Start by visiting your local library or bookstore.

Randy Johnson – Author of How to Save Thousands of Dollars on your Home Mortgage and Savvy Borrower articles, Randy is a mortgage broker who has financed over $1 billion in properties. He writes about home buying and real estate finance topics for CreditBloggers.com.

I have a collection of sayings from this wonderful American bard. This is one of my favorites:

There are three kinds of men: The ones that learn by reading. The few who learn by observation. The rest of them have to pee on the electric fence and find out for themselves.

When it comes to mortgages and homebuying, fewer and fewer fall in the first category. My publisher, John Wiley & Sons, just reported to me that the sales of all real estate books are off 75% from a few years ago. The sales of my book are off just as badly, maybe worse.  In my local two-story Barnes & Noble store, a mere 4 feet of shelf space is devoted to these books compared with 12 or 16 feet a few years ago.

Learning by the second method could be helpful, but it is nearly impossible to find someone buying a home and follow him around and try to learn from him as he does it.  No one does that and, unlike the obligatory "birds and bees" discussion, it doesn't seem to be a task that parents take on.

Most people seem to be in the third category. Obviously prominent among them are those who bought a home they could not afford, got a toxic mortgage, or more likely, both.  Millions of those people have been foreclosed upon or are going to lose their homes in the next few years. And I can practically guarantee you that almost none of these people read a book about mortgages and homebuying beforehand.

These people went through the process not even realizing at the time that they made a number of costly mistakes. In most cases, as escrow closed they were still totally clueless.  They didn't read or understand the purchase contract, the escrow instructions, the loan disclosures, the loan documents, or the final closing statement.  They just worried about, "When do I get the key?"

 

So where did they get their information?

Nowhere.  They had none. In reality, they had an encounter with an electric fence. They just didn't understand it at the time. In fact, many of the forces that got them into trouble – specifically greedy real estate agents and slimy mortgage loan officers – not only didn't want them to understand, they went out of their way to make sure that the people DIDN'T UNDERSTAND what they were doing.

Had the homebuyers really understood the implications of what they were signing, they would have aborted the transaction and no one would have made any money.

So whatever you do, especially when buying or refinancing a home, get educated about it. Start by visiting your local library or bookstore.

Randy Johnson – Author of How to Save Thousands of Dollars on your Home Mortgage and Savvy Borrower articles, Randy is a mortgage broker who has financed over $1 billion in properties. He writes about home buying and real estate finance topics for CreditBloggers.com.