Survey Finds Prospective Home Buyers Unaware of Ownership Costs
A majority of prospective home buyers are unaware of how much a mortgage would really cost them, a new survey conducted by Discover Home Loans found.
The poll surveyed 1,037 prospective home buyers from March 24 to April 4, 2014. The poll was powered by Versta Research, an independent survey firm that collaborated with Discover to compile the study.
The survey found that even though 87 percent of the participants were confident they would easily get a mortgage loan, only 63 percent said they were overwhelmed by the available mortgage information.
This fact was most prevalent in first-time home buyers with about 76 percent of them agreeing that the mortgage process was too confusing for them.
The study also revealed that 48 percent, nearly half of the respondents, didn't know how much a mortgage would cost them if they chose to buy an expensive property. About 41 percent of the participants also said they had yet to determine their down payment.
Only a little over half, 51 percent, said they knew how much their monthly EMI would cost.
Cameron Findlay, chief economist at Discover Home Loans, explained that the industry is trying to make the mortgage process easier for home buyers so as to help them get acquainted with the process.
"The sheer amount of information can lead to confusion and stress. Those looking to purchase should work closely with their lender and realtor to make sure they are comfortable with mortgage terms and understand the impact a loan will have on their finances," Findlay suggested, according to a statement.
According to the National Association of Realtors' latest existing home sales report, first-time home buyers underperformed, accounting on for 27 percent of the totals home sales. While experts pointed out that a shaky economic growth and weak wages was holding them back, an unfriendly mortgage application process could also be at play - as observed in the results of the Discover survey.
An earlier study conducted by Redfin, the property listing firm also found that home buyers and sellers were not on the same page when it came to understanding current housing trends. The study that analyzed several agents found that financing difficulties and lack of affordability were holding back buyers from investing in homes.
The Discover survey found that 94 percent of the surveyed home buyers thought that investing in a property was a good decision, but a poll by CNN Money recently found that the American Dream of owning a home was slowly fading away.