A new survey by Zillow Home Loans shows homebuyers are not looking around for mortgages, potentially costing them hundreds of dollars a month

  • Potential home buyers spent more time looking for options to buy their next vehicle and vacation than they did looking for mortgage lenders.

  • Seventy-two percent of potential home buyers have not looked for a mortgage or are planning to buy one.

  • Homebuyers who don’t shop could spend tens of thousands of dollars more over the course of their mortgage payments.

SEATTLE, November 18, 2022 /PRNewswire/ — A new survey by Zillow Home Loans shows that potential home buyers spend roughly the same amount of time looking for their next TV purchase and more time looking for their next vacation or car purchase than they do looking for a mortgage lender. In addition, 72% of potential buyers have not shopped or plan to shop around for the mortgage that best suits their financial situation.

According to the study, 28% of potential buyers spent at least a month searching for vehicles for their next car purchase, but only 13% said they spent that much time researching mortgage lenders before applying. Twenty-three percent of potential buyers spent at least a month researching vacation options before booking, and 12% spent at least a month looking for a new TV before purchasing.

The study shows that nearly half (46%) of prospective buyers who have applied for pre-approved mortgages have only applied once. Now that housing affordability is at its lowest in decades and mortgage rates have risen significantly in just the last six months, it’s more important than ever for homebuyers to understand their mortgage options and find the loan that best suits their personal financial needs. Zillow’s research indicates that potential homebuyers who don’t shop could spend tens of thousands of dollars more over the course of their mortgage payments.

“Homebuyers should take the time necessary to make an informed mortgage decision. It is often the most important financial decision someone makes. Taking the time to understand your credit report, rectify any issues, and consult with a qualified home buyer experience specialist,” he said Libby Cooper, vice president of Zillow Home Loans. Buyers often don’t understand that a mortgage adviser can be a partner in the home buying process. They help discuss options and find the right fit for the client’s personal financial situation. Zillow Home Loans can help homebuyers educate themselves and go into buying a home feeling more confident about this important financial decision.”

Not understanding mortgage applications is what most often causes people to skip research. The main reason potential home buyers indicated not buying or buying a mortgage was the fear that it would negatively affect their credit score (30%). While pre-approving a mortgage can impact your credit score, buyers can shop and apply multiple times within 45 days with just one hit on their credit score.

Other Zillow poll found that 86% of sellers prefer a buyer who is pre-approved rather than pre-qualified for a mortgage. Pre-approval includes your financial history (including income, assets, debts, and creditworthiness) that is requested during prequalification, but usually also requires documentation to support the information provided and a credit check. The financial control provided by pre-approval can give sellers more confidence that the buyer will complete the deal on time, and it also allows buyers to place a stronger, faster offer as soon as the right home comes on the market.

It is important for borrowers to understand how preparing to apply for a mortgage can significantly affect the mortgage rate they will ultimately qualify for. Taking the time to understand your credit report, correct any mistakes, and pay off existing debt will change what you pay for your home. recent Zillow analysis found that across the country, buyers with “good” credit can pay hundreds more on a monthly mortgage payment than those with “excellent” credit.

Thirty-four percent of potential buyers took no time to prepare before applying for a mortgage pre-approval, mortgage pre-qualification or mortgage, and nearly half of them (49%) spent less than a year preparing. Buyer preparation may include taking the necessary steps to improve your credit score and saving for a higher down payment.

Homebuyers looking to buy a home next year can take it steps to research and prepare for a mortgage when they start their adventure with home financing, including:

  1. Understanding their credit profile: Credit scores are key to getting approved for a mortgage, but many homebuyers find understanding credit complicated.

  2. Improving their creditworthiness: Once buyers become familiar with what’s on their credit report, they can take steps to pay off existing debts, pay bills on time, and review their credit report and dispute any mistakes.

  3. Avoiding account closures: Do not close the account to remove it from the report. These accounts are not automatically deleted and will still appear in your report.

  4. Holding off on large purchases that need to be financed: Wait with purchases that require financing, such as a car, until you close your home. This type of purchase will affect your debt-to-income ratio, which will negatively affect the amount of home loan you qualify for.

  5. Determining what affordability looks like: Once buyers have a good understanding of their credit report and are happy with their credit score, it’s time to understand how much home they can afford. Take advantage of a Zillow mortgage profitability calculator customize your payment details.

About the Zillow Group

Zillow Group, Inc. (NASDAQ: Z and ZG) is changing the face of real estate to help you open the next chapter of your life. As the most visited real estate portal in United StatesZillow® and its affiliates offer customers an on-demand experience to sell, buy, rent or finance in a transparent and easy way.

Zillow Group’s affiliates and subsidiaries include Zillow®Zillow Premier Agent®Zillow Home LoansZillow Closing ServicesTrulia®On the east®shows time®interactive bridge®dotloop®Easy Street® and HotPads®. Zillow Home Loans, LLC is an equal home lender, NMLS #10287 (www.nmlsconsumeraccess.org).

Zillow Home Loans logo, April 2019 (PRNewsfoto/Zillow Group)

Zillow Home Loans logo, April 2019 (PRNewsfoto/Zillow Group)



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SOURCE Zillow Home Loans

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