The papers and newsmagazines have been filled of late with articles about the crisis in Sub-Prime loans issued over the last few years. Seems as though many buyers took out loans that they clearly should not have: loans that sucked them in with a great interest rate for the first year or so and then boom! A monthly payment that doubled or worse and sending many new homeowners into forclosure and financial ruin.
Many of us who work in the industry saw this coming a few years ago: both in people sucked into buying a home without understanding how the "miracle" loan worked, and those who responded to the refinancing pitches of getting quick money out of their homes without being advised that this money should not be used to pay monthly bills. Many of us worked with people who got a "fantastic" rate through an Internet mortgage company and when we tried to get them to use a local lender, we were shot down by these buyers who were so enamored that with bad credit they could buy a home through these "miracle" online loans.
A miracle indeed. This crisis brings to mind a very important principle that I talk about in my book: what the Internet can and cannot do. I have long been wary of Internet mortgage companies because there is no accountability: if you work with a local lender, especially one that has been recommended, they have an interest in doing right by you as they have a reputation to protect. The online company out in dot-com land doesn't. If you get screwed, they move on to the next person. There is no one to help you understand the "fine print". A mortgage professional who has a relationship with you will look long-term and advise you against loans and programs that will hurt you.
It's the same in real estate. Property data flows freely: you don't need a real estate professional to simply provide data. But that is not where the value of a good Realtor lies. Their value lies not in providing data but making sense of what it means. Real estate,like other fiduciary fields such as finance and law, is not a good do-it-yourself project. This does not mean that you can't do a lot of legwork yourself but when it comes time to making the ultimate decisions regarding a loan program or which house to buy, make sure you consult with a pro.
Fortunately, with the growth of real estate consulting, you don't have to pay a full commission when all you want is the fiduciary counsel in making a real estate decision. You can hire someone to provide just the services you need. And you never have to go it alone.
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