Prospective home buyers spend about as much time researching new TVs as do mortgage lenders | Tech Reddy
A new study from Zillow Home Loans shows home buyers shop around to get a mortgage, which can cost them hundreds of dollars each month.
Prospective home buyers spend more time researching their next car and vacation options than researching mortgage lenders.
Seventy-two percent of prospective home buyers have not purchased, and do not have any plans to purchase, their own mortgage.
Home buyers who don’t buy can end up spending tens of thousands of dollars more over the course of their mortgage.
Seattle, November 18, 2022 /PRNewswire/ — A new survey by Zillow Home Loans finds that prospective home buyers spend about as much time researching their next purchase on TV and more time researching their next vacation or car purchase than they do at their mortgage lender. Additionally, 72% of potential customers have not shopped around, and do not have any plans to shop around, for a loan that fits their financial situation.
According to the survey, 28% of potential buyers spent at least a month researching their next car purchase, but only 13% said they spent a lot of time researching mortgage lenders before applying. Twenty-three percent of potential buyers spent at least a month researching their vacation before booking, and 12% spent at least a month researching a new TV before buying.
Research shows nearly half (46%) of prospective buyers who apply for a mortgage pre-approval submit only one application. Now that housing affordability is at its lowest level in decades and mortgage rates have skyrocketed in just the past six months, it’s more important than ever for home buyers to understand their mortgage options and find a loan that meets their personal financial needs. Zillow’s research finds that prospective home buyers who don’t buy a home can end up spending tens of thousands of dollars more during the mortgage process.
“Home buyers should take the time needed to make an educated decision on their mortgage. It is often the biggest financial decision a person makes. Taking the time to understand their credit report, address any issues and consult with a qualified mortgage advisor can make a big difference in the home buyer experience,” he said Libby Cooper, vice president of Zillow Home Loans. “Consumers often don’t realize that a loan officer can be a partner in the home buying process. They help discuss options and find the right fit for the buyer’s financial situation. Zillow Home Loans can help home buyers educate themselves and go into the home purchase feeling confident in this important financial decision.”
Lack of understanding about mortgage applications is what often drives people to skip research. The top reason prospective homebuyers indicated they did not or would not purchase a mortgage was concern that it would damage their credit score (30%). While pre-approval for a mortgage can affect credit scores, consumers can shop and submit multiple applications within 45 days with only one hit to their credit score.
Another one Zillow Research found that 86% of sellers prefer a buyer who has been pre-approved, as opposed to pre-qualified, for a mortgage. Pre-approval includes a financial history (including income, assets, debts and credit scores) requested during pre-qualification, but usually requires documentation to support the information provided and a credit check. A financial check provided with pre-approval can give sellers more assurance that a buyer will close on time, and allows buyers to make a strong, quick offer the moment the right home hits the market.
It is important for borrowers to understand that preparing to apply for a loan can have a significant impact on the loan interest rate they will ultimately qualify for. Taking the time to understand your credit report, correct any potential errors and pay off existing debts will change what you pay for your home. A recently Zillow Analysis showed that, nationally, consumers with “good” credit can pay hundreds more in monthly mortgage payments than those with “excellent” credit.
Thirty-four percent of prospective buyers did not spend time preparing before applying for a mortgage pre-approval, mortgage pre-qualification or mortgage, and almost half of them (49%) spent less than a year prepping. Buyer arrangements may include things like taking necessary steps to improve credit scores and maintaining high payments.
Home buyers looking to buy in the next year can pick up research and preparation steps on their loan as they begin their home financing journey, including:
Understanding their credit profile: Credit scores are key to getting approved for a mortgage, but for many home buyers, understanding credit is difficult.
To improve their credit score: Once consumers are familiar with what’s on their credit report, they can take steps to pay off existing debts, pay debts on time, and review their credit report and dispute potential errors.
To avoid closing accounts: Do not close the account to remove it from your account. Those accounts are not automatically removed and will continue to appear on your report.
Stop buying big things that need financing: Wait to buy things that need financing, like a car, until you close on the home. This type of purchase will have an impact on your credit-to-income ratio, which will have a negative impact on the amount of home loan you qualify for.
To determine what accessibility looks like: Once buyers have a good understanding of their credit report and are satisfied with their credit score, it’s time to figure out how much home they can afford. Apply for a Zillow loan an affordable calculator customizing payment details.
About the Zillow team
Zillow Group, Inc. (NASDAQ: Z and ZG) is reimagining the world to make it easier to open the next chapter of life. As the most visited website in real estate the United StatesZillow® and its partners provide consumers with the experience they need to sell, buy, rent or finance clearly and simply.
Zillow’s collaborative and support team includes Zillow®A representative of Zillow Prime®Zillow Home Loans™Zillow Closing Services™Trulia®In the East®ShowTime®Bridge Interactive®dotloop®StreetEasy® and HotPads®. Zillow Home Loans, LLC is an Equity Mortgage Lender, NMLS #10287 (www.nmlsconsumeraccess.org).
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SOURCE Zillow Loans