The terms for obtaining mortgages in Indianapolis IN have changed over the decades. The buzzword “creative financing” was very popular for realtors and home lenders who wanted to do everything possible to help families finance their dream homes. However, some families were offered loan terms that required them to assume much more risk than they understood. It is important that each person purchasing a home should completely understand all of the ramifications his or her home loan.
The first thing to understand about mortgages in Indianapolis IN is that the loan officer is not your friend. He will be very helpful, but he is approaching the transaction as a professional. He will assume that you are doing your homework. If he sees that you are accepting terms that are probably out of your reach, he will not put on sad eyes and make an impassioned plea that you reconsider, like some movie of the week. Just as the grocery store does not hire someone standing by the candy counter to ask customers “are you SURE you want that candy bar?” the loan officer will leave the responsibility of understanding the loan to you. Be sure that he is right.
A powerful example of this philosophy in action is the mortgages in Indianapolis IN known as Adjustable Rate Mortgages (ARMs). These were very popular a decade ago, and were advertised heavily as a way to get people into homes that did not qualify for the higher interest rate payments associated with fixed rate mortgages. What most families who accepted an ARM did not understand was the huge associated risk with adjustable interest rates. Essentially, by assuming an ARM, they had become speculators in the interest rate market. Most of these families did not understand that they had just assumed the same jobs that are filled in Wall Street by MBAs with years of experience. The irony is that if these families did have the proper financial experience, they would realize that the savings in interest payments did not match the increase in risk. In other words, although they got their loans, they did not get good deals. In today’s economy, the other shoe has dropped, and many families with ARM loans have been forced out of their homes.
