Prospective home buyers are confident that they’ll be able to find an affordable mortgage to make their purchase. Still, they’re thoroughly overwhelmed by the amount of information they have to wade through when securing a mortgage. That’s according to a survey by Discover Home Loans, a subsidiary of Discover Financial Services. It found that 87 percent of people planning to buy a home in the next year and a half are pretty sure they’ll be able to get a mortgage they deem affordable. The survey also found that 94 percent of prospective buyers think purchasing a home is a good investment.
But 63% are overwhelmed by the amount of mortgage information available, including anything from what they find online, to offers from lenders, to the stack of paperwork that accompanies any mortgage transaction. An even greater percentage, 76%, of first-time buyers reported feeling overwhelmed
It makes sense that buyers today are confident they’ll be able to get an affordable mortgage — they’re taking a lot longer to educate themselves on the mortgage process before they start shopping, said Cameron Findlay, chief economist of Discover Home Loans. If they weren’t pretty sure they could get a mortgage they’d be able to afford, they probably wouldn’t consider buying to begin with. (Although presumably that doesn’t apply to everyone; 13 percent of those planning to buy a home said they aren’t confident they’ll be able to secure an affordable rate on their mortgage.)
This longer education period (for most) is a change from a decade ago, when people who wanted to buy a home may have felt compelled to jump into the process fairly quickly, before they were priced out of the housing market, Findlay said. But many are still shaky when it comes to understanding their home financing, and have some work to do before fully understanding how a mortgage will fit into their budgets.
Of the 1,037 prospective buyers surveyed, 87 percent know what type of property they can afford, and 83 percent say they’re prequalified for a mortgage. But only 52 percent have determined their projected monthly payment. And only 59 percent have calculated their down payment.
One change is coming next year that could potentially help borrowers gain a clearer understanding of their options: Lenders will be required to use simplified disclosure documents to inform borrowers of mortgage terms, Findlay said. The most helpful part of the new disclosures is that all lenders will be required to use a standardized display of information, which should make comparing loans easier, said Keith Gumbinger, vice president of HSH.com, a provider of consumer loan information.
Here are some tips to make the mortgage process less confusing.