Understand the Deal

Buying a home is a major transaction in anybody’s life. You are committing to an obligation that can last thirty years.  The obligation usually absorbs a major portion of your income in making the mortgage payments, real estate taxes, insurance and maintenance.    As a homebuyer you are dealing with real estate agents, title companies and lawyers.

A homebuyer is surrounded by these real estate professionals rattling off terminology and using terms and acronyms that most of us are only vaguely familiar with.  They will talk in terms like “30-year loan with a three one arm.”  How many homebuyers know what that means?   The sales contracts are long and complicated by the attempt to cover every possibility for every transaction with one form agreement.

The mortgage loan documents required to obtain a home mortgage loan are voluminous.  This is because of federal government regulations which require numerous disclosures and warnings which to the bureaucratic mind will protect the consumer.  In their opinion a consumer is a gullible, ignorant victim being led innocently to financial doom.

Having been a lawyer for forty years I believe all of these things; instead of protecting a homebuyer, work to intimidate that buyer.  As a young lawyer I would read a complicated document or listen to an argument or presentation and think to myself “What the hell are they talking about?”  That was followed by a dilemma.  Do I ask and expose my dreadful ignorance or keep quiet and hope everything is okay?

A mentor, lawyer, legal scholar and judge told me “Son, always ask until you understand the deal.  You will find out that as often as not the person pushing the language can’t tell you what it means.”  Question the people pushing your deal until you can repeat it in simple terms that you understand.  That is what I do.