Americans uncertain about mortgage process -- survey

by Ryan Smith16 Sep 2014
Even though most Americans feel that now would be a good time to buy a home, many are hesitant to do so because they’re uncertain about qualifying for a mortgage and edgy about navigating the home buying process, according to a new study by Wells Fargo and Ipsos Public Affairs. The survey also revealed that many consumers hold misconceptions about the mortgage process.

“Although the home buying process has changed in many ways in recent years, our survey found Americans still view homeownership as an achievement to be proud of and many believe that now is a good time to buy a home,” said Franklin Codel, head of Wells Fargo Home Mortgage Production. “Our survey also suggests we have an opportunity as lenders, nonprofit agencies and real estate agents to better inform Americans about credit ratings, mortgage costs and housing affordability. This would help demystify the home buying experience for many consumers.”

The survey also revealed that most Americans feel that their own finances are in order. Eighty-two percent said they understood how to manage their finances and didn’t generally spend beyond their means. However, the survey did reveal that many had misconceptions about the mortgage process.

For instance, 30% of survey respondents believed that only people with high incomes could obtain a mortgage, and 64% believed they needed a “very good” credit score to buy a home. And while 64% of respondents said they knew how large a down payment was required to buy a home, nearly half (44%) believed that a 20% down payment was required. That last statistic is especially telling, since lacking funds for a down payment was one of the biggest issues reported when consumers were asked about barriers to buying a home.

What’s all of this mean? For starters, mortgage professionals need to get the word out that home buyers should ask questions about the mortgage process.

“It is important for prospective home buyers to feel empowered to ask lenders and real estate agents questions about available options, such as down payment assistance or FHA loan programs or VA loans for veterans,” Codel said. “Ninety-five percent of survey respondents said they want to own a home if they don’t already. Informing prospective homebuyers about their options is the first step toward helping them realize their goals.”

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