Home Buyer Reality Report 2017
by Deborah Kearns

Buying
a home — and finding the right mortgage — is a journey that can test your grit
and resolve. If you haven’t done the proper research and you don’t know what to
expect from the process, it can be even more stressful. Your credit history,
income, assets and savings will be under scrutiny, and what you don’t know
about mortgages can hurt you.
To
better understand the psychology of the home-buying experience, NerdWallet
conducted its first Home Buyer Reality Report. The study analyzes each step of
the journey to homeownership, from home shopping through the lending process.
It looks at the roadblocks to mortgage preapproval, why some borrowers never
make it to the closing table and why others have regrets even after they become
homeowners.
“According
to our research, borrowers who don’t understand the mortgage process or don’t
know enough about their own credit history tend to hit obstacles or be rejected
when applying for mortgages,” says Tim Manni, mortgage expert at NerdWallet.
NerdWallet’s
first Home Buyer Reality Report looks at the journey to homeownership, from
starting the loan process to why even successful homeowners wish they’d done
things differently. We found that proper preparation is key, because what you
don’t know about mortgages can hurt you.
“They
also tend to feel regret after their deal is done, even if they succeeded in
buying a home,” Manni adds. “That tells me borrowers aren’t doing enough
research — on themselves or the mortgage process — before applying for a home
loan.”
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Nearly
half of American homeowners in our survey (49%) said they would do something
differently if they were to go through the home-buying process again. But we
found distinct differences in home-buying attitudes and trends between
millennials (ages 18-34), Gen Xers (35-54) and baby boomers (55+). The report,
based on a survey of more than 2,200 people, about 1,300 of whom have applied
for a mortgage and more than 1,400 of whom are current homeowners, was
commissioned by NerdWallet and conducted online by Harris Poll.
41%
of Americans who have applied for a mortgage felt they were not aware of all of
their loan options during the lending process.
Among
mortgage applicants[1], 28% said they felt they weren’t a priority to their
mortgage professional during the loan process.
6%
of mortgage applicants reported that they had been denied a mortgage. Of those
who have been denied[2], more than half (52%) said they had a high
debt-to-income ratio, 39% said they had issues with credit history or score,
and 25% said they had insufficient income.
Many
American homeowners said the home-buying process was: stressful (42%),
complicated (32%) and intimidating (21%), yet 41% said it was manageable and
30% even said it was rewarding.
Among
homeowners, 27% of millennials reported borrowing at a mortgage rate they
thought they could afford when they purchased their current home.
11%
of millennial homeowners said they no longer felt financially secure after
purchasing their home.
Gen
X mortgage applicants were less likely to report having a positive experience
(26%) with the mortgage process than millennial applicants (39%), but even
though there was a difference in experience, Gen Xers were just as likely to
have been approved for a home loan (91%) as millennials (89%).
Millennials
(25%) and Gen X (20%) mortgage applicants were twice as likely to have been
approved for a mortgage at a higher interest rate than expected in comparison
to baby boomers (10%).
If
they were to go through the home-buying process again, nearly half of American
homeowners (49%) would do something differently.
Roughly
3 in 5 millennial (57%) and Gen X (61%) homeowners indicated they had regrets,
saying they would do things differently the next time around in the home-buying
process, in comparison to only 38% of baby boomers.
There
are distinctively different experiences and emotions among millennials, Gen
Xers and baby boomers when it comes to navigating the home-buying process.
The
loan process
According
to the U.S. Census Bureau, 63.5% of Americans own a home, which translates to
74.3 million households. According to our survey, more than half (58%) of
Americans had applied for a mortgage. Married adults (80%) were much more
likely to apply for a mortgage than unmarried adults (37%).
Among
mortgage applicants, 89% had been approved for a home loan. Married applicants
were more likely to have been approved (92%) than unmarried applicants (84%).....
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