Monday, November 17, 2014

New study reveals more than half first time homebuyers don’t understand loan options

No one knows better than industry professionals just how complicated choosing the right home mortgage loan can be for first time homebuyers, except maybe the buyers themselves. The 2014 U.S. Primary Mortgage Origination Satisfaction Study by J.D. Power states that a full 54% of first time homebuyers don’t fully understand all of the options available to them.

Surprisingly, only 4 out of 10 people felt that their mortgage representative took the time to explain everything in detail so that they could make an informed decision. As you know, there’s a lot to consider when deciding which loan is best suited to your needs, not to mention any special programs that might be available at the time. First time homebuyers need to fully understand the different types of loans available (fixed rate, adjustable rate, etc) as well as any options that might help them to lower the amount of cash they will need for the down payment.

44% of new homebuyers also stated that their agent did not take the time to fully explain all of the closing documents. I find this to be surprising. While many of the documents required to be signed by the buyer are at least somewhat self explanatory, some of them can be a bit confusing and definitely require some elaboration on the part of the agent. In comparison, 26% of buyers that have bought a home before also felt that their agent was less than thorough in this area.

This being said, the study showed that overall 78.6% of first time buyers were satisfied with the entire process of obtaining their first mortgage. It’s important for all of us involved in the process to remember that 1st time buyers are experiencing the most complicated (and sometimes intimidating) application process that they have ever been exposed to and they need as much guidance and reassurance as possible. We industries pros take many things for granted that our clients simply do not understand and we must always try our best to reassure them.

So how much of this is the responsibility of the agent? All of it! Obviously we are not mortgage professionals, but if we cannot answer any questions that our clients may have, it is our responsibility to make sure that someone else does. Considering the fact that a full 44% of first time buyers felt that their agent did not explain everything as well as they had expected, this is obviously one area that needs a lot of improvement. I have often asked myself “What can I do to better serve my clients? Well, here’s the answer! I can take the time to be sure that all of their questions are answered so that they can feel more comfortable and confident about the entire home buying experience.

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