Most prospective buyers don’t know real cost of ownership
First-time homebuyers are overwhelmed by mortgage information
While 94% of prospective homebuyers believe they are making a good investment by purchasing a home, many have not actually done the math to determine what purchasing a home will cost them.
Almost half are unsure how to calculate their down payment and their monthly payment and most feel overwhelmed by the volume of information to absorb — especially those 30 and under.
Those are the findings of a new independent poll of prospective homebuyers commissioned by Discover Home Loans.
“The industry is becoming more transparent in an effort to help homebuyers become informed about changes that may affect their process,” said Cameron Findlay, chief economist at Discover Home Loans. “The sheer amount of information can lead to confusion and stress. Those looking to purchase should work closely with their lender and Realtor to make sure they are comfortable with mortgage terms and understand the impact a loan will have on their finances.”
Although 87% are confident they will find an affordable home loan, the poll shows many have not done the math to determine their costs. In fact, 63% find themselves overwhelmed by the amount of mortgage information available.
Here’s how it breaks down.
A large majority of buyers surveyed are confident in their ability to secure an affordable loan and obtain the type of property they want.
More than three-fourths of buyers, 83%, have been pre-qualified for a home loan.
Sixty percent of respondents began their home search after at least one of the following took place, including:
- Having achieved sufficient financial stability, 22%
- The market becoming more affordable, 20%
- Improved credit scores to qualify for better mortgages, 20%
- Mortgage rates and lending options becoming more affordable, 18%
- Having saved enough for a down payment, 17%
Unsure of the Cost
Despite feeling financially prepared when entering the process, many homebuyers don’t know what purchasing a home will actually cost them.
Although 87% know what type of property they can afford, only 52% have actually determined what their projected monthly payment may be.
Forty-one percent have yet to calculate their down payment.
Nearly half, 48%, don’t know how much their mortgage payment would be if they chose a more or less expensive property.
Inundated with Information
In general, the majority of those looking to purchase a home find information about the financing process overwhelming.
Nearly two-thirds feel overwhelmed by the amount of information available on home financing.
This is especially true for those under age 30, of which 76% reported feeling overwhelmed.
Seventy-six percent of first-time buyers reported feeling overwhelmed, versus 54% of those who have previously owned.