Homebuyers are starting their home search with mortgage options before even looking at houses.
About 73.5% of house shoppers claim to seek financing options prior to searching for a home, according to a survey by loanDepot and its real estate services provider mellohome. For first-time homebuyers, this figure hit 85.1%.
"This is definitely a shift from 10 years ago. It emphasizes how customers are changing their approach to home buying. In the past, they relied on a real estate agent to drive the entire process. Now the customer is taking charge and doing a lot of the groundwork before they even get an agent involved," Chris Heller, CEO of mellohome, said in a press release.
The survey, conducted by Drive Research on behalf of loanDepot and mellohome, measured responses from a random national sampling of nearly 1,000 home purchase customers in July.
Homebuyers showed signs of a lack of knowledge about home loans and frustrations with the speed of the mortgage process.
Over 34% of consumers reported that understanding fees was the most stressful aspect of obtaining a mortgage, while 30.9% named finding the right loan as the most difficult. About a quarter of borrowers noted that the length of time it takes to secure a mortgage was a top pain point.
Because housing inventory is limited, it would behoove purchasers to secure loan preapproval as a competitive advantage and help prepare them for how much house they can afford in a climate of rising prices.
"Homebuyers have learned that getting their financing in order upfront helps prepare them to shop for a home with confidence and puts them in a more advantageous, competitive position, especially in tight markets. With the lack of inventory we've seen in recent years, it's especially important to be armed with a preapproval when that perfect home appears," said Heller.
