Nearly Half of Home Buyers Don't Understand Essential Mortgage Information...
A new survey indicates
that home buyers are ill-prepared to take out a mortgage, answering basic
questions about mortgage information wrong nearly half (46 percent) of the
time, according to a Zillow Mortgage Marketplace. In fact, 44 percent of survey
respondents admitted they are not confident in their knowledge of mortgages or
the mortgage process.
More than half (57
percent) of prospective home buyers who were polled do not understand how
adjustable rate mortgages work. When asked if interest rates on 5/1 ARMs
always reset higher after five years, the majority of home buyers answered yes,
when in fact, the interest rate will adjust to the prevailing rate after five
years, even if rates have declined.
(34 percent) of the respondents who are prospective home buyers do not
understand that lender fees are negotiable and that they vary by lender. They
believe lenders are required by law to charge the same fees for credit reports
- Nearly half (45 percent) of polled prospective
home buyers believe that they should always buy mortgage discount points
when obtaining a mortgage.
- More than half (55 percent) of prospective
home buyers in the study do not understand that mortgage rates vary
throughout the day.
- More than one-third (37 percent) of
prospective home buyers who were polled believe that pre-qualifying for a
loan means they have secured financing.
- More than two in five (42 percent) of the
polled prospective home buyers do not understand that Federal Housing
Administration (FHA) loans are available to all buyers.