MReport April 2017

TheMReport — News and strategies for the evolving mortgage marketplace.

Issue link:

Contents of this Issue


Page 53 of 67

52 | TH E M R EP O RT O R I G I NAT I O N S E R V I C I N G DATA G O V E R N M E N T S E C O N DA R Y M A R K E T DATA THE LATEST Insecurities Lie Within the Buying Process About one third of those denied a home loan felt "embarrassed," while 41 percent felt their denial was "unfair." S earching for and buying a home can be one of life's most daunting experiences. First, prospective home - owners must look at homes in their price range, and nowadays, there may be multiple contracts on the home they would like to purchase. Then, there are all the details they have to provide in order to get a loan, such as credit history, income, and assets. To better understand the psy - chology of the homebuying ex- perience, NerdWallet released its first Home Buyer Reality Report in late February, which ana- lyzed each step of the journey to homeownership, from home shopping through the lending process. It looked at the road- blocks 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," said Tim Manni, a mortgage expert at NerdWallet. "They also tend to feel regret after their deal is done, even if they succeeded in buying a home," Manni added. "That tells me borrowers aren't doing enough research—on themselves or the mortgage process—before applying for a home loan." To better understand the feelings various people have regarding purchasing a home, NerdWallet commissioned a survey conducted online by Harris Poll. The report was based on a survey of more than 2,200 people, 1,300 of whom had applied for a mortgage, and more than 1,400 who are current homeowners. Of those who had applied for a mortgage, 6 percent reported being denied. Among them, 50 percent said they were denied on their first try, and one-quarter said they were denied more than once. The majority of mortgage ap - plicants who have been denied a mortgage (79 percent) received an explanation from their mortgage professional as to why their loan was denied. Forty-one percent thought their denial was unfair, and 33 percent felt it was embar - rassing. On the other hand, more than one-third (35 percent) said it encouraged them to improve their financial situation. Among mortgage applicants who had been denied, the top three reasons for denial were a high debt-to-income ratio (52 percent), issues with credit history and score (39 percent), and having insufficient income (25 percent). The survey found that of mortgage applicants who had been denied a mortgage, 31 per - cent were surprised they were denied. The rejection, however, doesn't seem to deter Americans from pursuing their dreams, as 33 percent said they knew the next steps and actions they needed to take to purchase or refinance a home. Other facts revealed were that there are distinctively different experiences and emotions among millennials, Gen Xers, and Boomers when it comes to navi - gating the homebuying process. In fact, 11 percent of millennial homeowners said they no longer felt financially secure after purchas- ing their home, and roughly 3 in 5 millennial (57 percent) and Gen X (61 percent) homeowners indicated they had regrets, saying they would do things differently the next time around in the homebuying process, in comparison to only 38 percent of baby boomers. Interestingly enough, Gen X mortgage applicants were less likely to report having a positive experience (26 percent) with the mortgage process than millen - nial applicants (39 percent), but although there was a difference in experience, Gen Xers were just as likely to be approved for a home loan (91 percent) as mil - lennials (89 percent).

Articles in this issue

Archives of this issue

view archives of TheMReport - MReport April 2017