This newspaper article is part of a series exposing just how sleazy the builder Beazer Homes seems to be. Before I get into the particulars of this article, I just want to say upfront that I had some inkling of their exact level of sleaziness several years ago, when my husband and I saw an SUV driving around our hometown. The car owner had commissioned a custom tire cover that read, “Beazer Homes’ Foundations Crack and Sink”. Not a good sign. You have to figure that any builder who really cared about their reputation would do whatever it took to keep that kind of negative advertising off the road.

In the past year, The Charlotte Observer has been writing article after article detailing the various lows to which this builder seems to have sunk. They have been accused of misleading customers and lying to lenders in order to have people approved for loans that they could not afford. Several of their low-cost subdivisions have huge foreclosure rates, causing property values to plummet, and trapping the remaining residents, who can no longer sell their homes for enough to cover their outstanding mortgages. In fact, 1 out of every 5 original owners have been foreclosed upon in some neighborhoods.

Clearly, there was quite a bit of unethical, if not outright illegal, stuff going on with this builder. But this new article raises some tough questions for home buyers, and it turns out that one particular piece of the tragedy could have been avoided with just a little bit of homework on their part.

Essentially, this latest article details how the builder offered to pay home buyers’ closing costs if they arranged their financing through Beazer. The catch turned out to be that the rates their lender offered were upwards of 1% more than the average interest rates at the time, and significantly increased home buyers’ monthly payments over what they might have gotten elsewhere.

The article lays most of the blame for consumers’ overpaying on Beazer, and I have to agree that this company seems to be highly unethical. In this case, though, I have to admit that what the article really exposed was the shocking and tragic lack of financial knowledge or expertise shown by some home buyers.

Look at it this way: Buying a home is the single largest purchase that many people will ever make. They are buying something worth many times their yearly salary, and they will be paying for it for the next 30 years, in many cases. It will take up more of their monthly income than virtually any other single category of spending. Yet it is apparent that many people who would shop around for a good deal on a $300 television set as a matter of course, don’t think to get even one comparison quote when they buy a mortgage.

For instance:

Franklin says she didn’t shop around because she trusted the company and believed it was giving her a good deal. Now she is struggling to keep the home.

 

Fact is, you can get virtually any interest rate imaginable on a mortgage, depending on the bells and whistles that are included. If you make no down payment or have a limited or blemished credit history, rest assured you will be paying more. Likewise if you are getting discounted closing costs, in many cases. Just because a lender will sign you up for a given rate does not meant that the rate is a good deal.

I think many people are so intimidated by the home buying process that they put their trust in the friendly face who works in the model home sales office, instead of in their own common sense. When we feel that we are out of our area of expertise, we naturally want someone who is familiar with the process to guide us. That’s a very valuable and correct instinct. As a rule, however, it is wise to expect people who are trying to sell you something to act in their own best interests, rather than yours. I’m not trying to be cynical here, and of course there are many very upstanding salespeople in this world. I’m the kind of person who can’t imagine that the individual I’m dealing with has anything but the best of intentions. I’m inherently compelled to give them the benefit of the doubt.

When you are buying a house, however, you really cannot afford to take that chance. Trust, if you like, but definitely verify. Spend some amount of time looking to see what the usual interest rates are, and contact 2 or 3 other lenders to see what they could offer you. If nobody else will give you a loan, you should seriously consider whether you really can afford this.

What do you have to lose? Only thousands of dollars if you don’t do it.

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