Although the vast majority of people seeking to buy a home are confident that they are making a good investment and will find an affordable mortgage, the process daunts many.
A poll by Discover Home Loans shows that 63% of homebuyers are overwhelmed with the amount of information involved in securing a loan. Ninety-four percent said they believe buying a home is a good investment, and 87% are certain they will be able to afford their mortgage payment, but only 52% have actually figured out what their monthly mortgage cost will be after closing on their dream property.
Ready to buy – but not sure what it will cost them
Before making the leap into home ownership, most people (83%) get prequalified for a mortgage. And 60% don’t start looking at properties until they have achieved some sort of milestone or determined that the timing is right.
Twenty-two percent of those surveyed said they waited until they were financially stable, and 22% held off until the market became more affordable. Twenty percent made sure to improve their credit score before trying to buy a home, 18% timed their search to coincide with lower interest rates and better lending options, and 17% saved up for a down payment first.
As far as affording their future home, many people go into the home search process unsure of what their monthly costs will ultimately be.
Forty-one percent haven’t figured out what their down payment will be, and 48% don’t know how choosing a more or less expensive property will affect their monthly payment amount. But 87% do have a general idea what sort of property they can afford, and 52% have done the math to calculate their future mortgage.
Amount of information overwhelming
There is no lack of information about the mortgage process, according to the Discover survey. In fact, some people might say there is too much. Close to two-thirds of homebuyers said they are overwhelmed by the amount of information available to them.
Young people are especially vulnerable to feeling in over their heads. Seventy-six percent of folks under the age of 30 said they are facing information overload as they pursue the home buying process. But experience seems to ease the stress. Only 54% of folks who have bought a home before feel similarly overwhelmed.
When making decisions about buying a home, people most often turn to a real estate agent, followed by friends and family. Sixty-six percent of those polled seek advice from a realtor, and 56% also talk to friends and family. When it comes to securing financing, however, 59% get assistance from mortgage bankers and 49% ask a real estate agent for input.
Discover Financial Services maintains a home loans service in addition to its consumer credit card and student loans divisions. The Discover Home Loans survey of prospective homebuyers polled 1,037 people from March 24 to April 4, 2014.