Even after all of the news about the dangers associated with purchasing a home without being fully prepared, it appears as though the message still isn’t getting out to potential homebuyers. According to a newly-released survey from Zillow Mortgage Marketplace, a surprisingly high number of people don't understand the home buying process, especially the information about obtaining a mortgage, and may be making poor financial decisions as a result.
Those surveyed answered basic questions about mortgage information and terminology wrong almost half of the time. Forty-four percent of buyers admitted that they are not confident in their knowledge of mortgages or the mortgage process!
Other findings include:
- About 77% of prospective homebuyers did not clearly understand what factors are involved in determining a mortgage interest rate, believing that annual income is an important determinant.
- More than one-third (34%) of the respondents did not understand that lender fees are negotiable and that they vary by lender. They believe lenders are required by law to charge the same fees for credit reports and appraisals.
- More than one-third (37%) of prospective home buyers who were polled believe that pre-qualifying for a loan means they have secured financing. The reality is that "pre-qualification" is used to describe an earlier step in the process when a lender or Homeownership Advisor approximates how much you can afford, but does not pull your full credit report or request any sort of documentation to verify the information you provide. A pre-qualification is NOT a pre-approval.
Before you start the process of making what may be the LARGEST PURCHASE IN YOUR LIFE, we highly recommend that you participate in a Home Stretch workshop. This is a class for potential homebuyers that is recognized nationally as a proven tool for preparing Minnesotans to be successful homeowners. There is an entire section of the Home Stretch workshop dedicated to fully understanding mortgage loan terminology, how to shop for a loan, how credit affects loan payments and how to avoid being taken advantage of when choosing a loan.
Year after year, Home Stretch participants report that help with understanding mortgages and the loan process was the MOST HELPFUL part of the workshop. In fact, NINETY-FIVE PERCENT of Home Stretch participants report that their participation in Home Stretch will help in the process of buying a home, and 98% would recommend the workshop to someone else. (For more information about consumer satisfaction with Home Stretch, view the most recent report here).
Are you thinking of purchasing a home in Minnesota? You can learn more about the mortgage loan process - - and the entire home buying process by taking a Home Stretch workshop. For more information, click here.