As Mark Zandi, chief economist at Moody's Analytics Inc., of West Chester, sees it: "The financial literacy of the average American is nowhere near where it needs to be.
"How much we earn is very important to our financial well-being, but how we manage that income is equally, if not more, important," Zandi said. "That includes how much we save, how we invest our savings, and what debts we take on to supplement our income."
Home buyers tend to fall into two categories, according to Realtor/mortgage broker Fred Glick: "The number crunchers love to get all the details and evaluate them sometimes to a fault, and [the] others just want to get the bottom line and trust people to do a good job for them."
First-time buyers often "have no idea what their credit score is, and many still pay everything in cash," said Christopher J. Artur, a veteran real estate broker in the city's Mayfair section. "Good agents know they have to stay with these buyers, or the deal will fall through somewhere along the line."
And frequently, Artur said, first-timers believe that once they apply for a mortgage, they're in the clear. "They submit the application, and then they go and buy a car. The lender sees the new debt, and the mortgage is rejected."
Two things to remember if you want a mortgage: Do not create new debt until you walk way from the settlement table with the keys to the house, and pay all your bills in full and on time while the bank is considering your application.
In these tight-credit times, it is more important than ever to have your financial house in order before making a purchase as expensive as a home.
William J. Schroeder Jr., a bankruptcy lawyer in Colwyn, spends his days trying to help people who have gotten in too deep.
