Inman

Figuring out financing is the first step for 73.5% of buyers

By September 12, 2018 No Comments
Figuring out financing is the first step for 73.5% of buyers
REPOSTED DIRECTLY FROM INMAN NEWS. THIS CONTENT HAS NOT BEEN MODERATED BY WFG NATIONAL TITLE.

As low supply and high demand create uber-competitive real estate markets, homebuyers are beginning to prioritize financing options first, according to a recent report by loanDepot and its home services brand, mellohome.

In a survey of 1,000 buyers, 73.5 percent said they researched financing options before they began looking for a home. That percentage jumped to 85.1 percent for first-timers.

“This is definitely a shift from 10 years ago,” said mellohome CEO Chris Heller in a press release. “It emphasizes how customers are changing their approach to homebuying. In the past, they relied on a real estate agent to drive the entire process. Now the customer is taking charge and doing a lot of the groundwork before they even get an agent involved.” 

“Homebuyers have learned that getting their financing in order upfront helps prepare them to shop for a home with confidence and puts them in a more advantageous, competitive position, especially in tight markets,” he added. 

Just like the process of searching for the perfect home, searching for the right loan option comes with its fair share of headaches. Fifty-nine percent of buyers said the overall home loan experience “was not easy,” with coordinating paperwork being one the largest pain points (64.1 percent).

In a phone call with Inman, loanDepot COO Tammy Richards explained that the traditional mortgage application process requires buyers to complete four-page applications as well as submit two years of W-2s and tax returns, pay stubs, two months of bank statements and some form of ID.

In the past, she said, buyers had to provide paper copies of those items, but they’re now able to complete the process online and pull pertinent information directly from their bank or human resources provider. Although the new process doesn’t completely relieve the stress that buyers feel, it does reduce it.

“Our data-first approach completely changes the mortgage mindset,” Richards added. “With the tools and technology we have available, we can, in many cases, reduce, or even eliminate, a significant amount of the heavy lifting that homebuyers expect to go along with their mortgage experience and give them confidence and peace of mind right from the start.”

Lastly, a third of buyers noted difficulties in understanding fees (34.1 percent) and finding the right loan (30.9 percent). Furthermore, a fourth of buyers (24.6 percent) said their real estate agent and loan consultant didn’t consult with each other, further adding to the confusion. 

Richards said consumers can ask for a loan estimate from various lenders, which will include a fee breakdown. From there, buyers can go through a comparison process with their real estate agent or another trusted adviser to help identify the best loan for them.

When it comes to communication woes, Heller said the issue isn’t that real estate agents and loan consultants aren’t communicating, but that buyers just aren’t aware of the work going on behind the scenes.

“On 100 percent of transactions, agents and lenders are talking with one another,” Heller said in a statement, referring to mellohome’s Concierge Specialist service that matches buyers, agents and lending officers and ensures all parties communicate.

“The fact that customers aren’t aware of that tells us that more transparency and thorough communication by the real estate professional is warranted. We all need to do a better job,” he said.  

Email Marian McPherson.

The views and opinions of authors expressed in this publication do not necessarily state or reflect those of WFG National Title, its affiliated companies, or their respective management or personnel.

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