One-third of Homebuyers Surveyed Are Ill-prepared to Get a Mortgage
Tyler Frank,
Paramount Mortgage
NMLS ID 942420
According to a survey recently conducted by Zillow, many homebuyers are really not armed with the information they should have before attempting to obtain a mortgage. For example, over one-third (34 percent) of the prospective homebuyers surveyed did not know that a qualified borrower can obtain a home loan today with less than a five percent downpayment.
In addition, many homebuyers have misinformation that can prevent them from obtaining the best possible mortgage interest rate. For example, 26 percent of the homebuyers said they thought they were obligated to obtain their home loan with the lender that pre-approved them, and 24 percent believed that all lenders are required to charge the same amount for credit reports and appraisals.
Additional survey findings:
- One-third (34 percent) of polled prospective homebuyers do not know what the term “annual percentage rate” (APR) means. The annual percentage rate (APR) is a yearly rate that reflects the true cost of a mortgage and is inclusive of the interest rate, points, mortgage insurance (when applicable), and other fees, including origination and underwriting fees. The APR will typically be higher than the interest rate quoted by lenders, and should be used as a starting point when comparing loan quotes between lenders.
- Half (50 percent) of prospective homebuyers in the study do not understand that mortgage rates change throughout the day. In reality, much like the stock market, mortgage rates can change rapidly throughout the day. To get the optimum rate, it is important to monitor rates and shop around.
- Nearly one-third (31 percent) of current homeowners incorrectly believe that you must wait seven years after a short sale or foreclosure to purchase again. In most cases, homebuyers with a short sale history typically only need to wait 2-4 years depending on their down payment and the loan type. The waiting period after a foreclosure is longer – typically, buyers need to wait 3-7 years before they can qualify for a new home loan.
- More than one-third (34 percent) of current homeowners incorrectly believe that you can only refinance your home every 12 months. In reality, homeowners can refinance as often as they want. However, homeowners should weigh the cost of the refinance against the time they will own the home and the monthly payment change to determine if refinancing makes sense.
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About the author: Tyler is Paramount Mortgage Company’s general counsel as well as a licensed mortgage loan originator. Tyler is a 1999 graduate of the University of North Carolina at Chapel Hill where he was a member of the university’s Dean’s List. He received his J.D. from Washington University’s School of Law in 2002 and is a member of the Missouri Bar Association and the Illinois State Bar Association.
Tyler is “big brother” mentor and role model to a young man through the Big Brothers Big Sisters of Eastern Missouri. He is a member of the St. Louis Sports Commission’s Associates Board, the University of North Carolina at Chapel Hill’s Alumni Admissions Committee and Mary Institute and St. Louis Country Day’s Alumni Executive Committee. In 2012, Tyler successfully summited Mt. Kilimanjaro (19,341 ft.) in Tanzania, Africa, and ran his first full marathon.
Tyler can be reached by email at tfrank@paramountmortgage.com or by phone at 314.372.4313.
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