— /PRNewswire/ — The impact of the widely publicized mortgage
meltdown appears to have caused little change in borrower behavior during the
past two years, according to a new Zillow Mortgage Marketplace survey of 2,729
adults conducted on its behalf in April by Harris Interactive. Borrowers report
they are spending no more time researching a home loan today than they did in
2008, and those who obtained a loan are soliciting fewer quotes — an average of
three quotes versus four in 2008.
A home purchase is one of the
largest investments most people will make in a lifetime, yet borrowers who
obtained a home loan in the past five years typically spent just five hours
researching their options, which is unchanged from March 2008. Nearly one-third
(31 percent) spent two hours or less. This is on par with the typical time spent
researching a vacation or computer purchase and half the time consumers
typically allocate to research a car purchase, yet these items cost just a small
fraction of the average cost of a home. For example, the average home loan costs
five times more than the average car and 80 times more than the average
vacation.
“The last few years should have
driven home the lesson that understanding one’s home loan is critically
important, but mortgages continue to be something that most people don’t want to
spend time thinking about,” said Zillow chief economist Dr. Stan Humphries. “Not
understanding a home loan can have catastrophic consequences. Starting from our
first survey two years ago, I’ve been surprised that people spend more time
shopping for cars and televisions than they do researching mortgages. I’m
further surprised that they spend no more time shopping for mortgages now than
they did two years ago, even in the midst of an unprecedented foreclosure
crisis. People spend countless hours shopping for the perfect home, yet few
realize that small differences in the interest rate or discount points can add
tens of thousands of dollars to the overall cost of the home. In an area like
mortgages, where the lender has so much more information that the typical
borrower, getting multiple offers from lenders and being able to compare them
relative to one another is critical to leveling the playing field.”
In fact, borrowers who shop
around and get a number of mortgage quotes can save thousands over the life of
the loan — even half of a percentage point in loan rate can save the buyer of a
$300,000 home more than $26,000. On a $500,000 home, the savings can be more
than $44,000(ix). Even over a shorter period of time, the savings from a half of
a percentage point can be substantial: in five years, the buyer of a $300,000
home can save nearly $4,500 and the owner of the $500,000 home could save closer
to $7,500.
Borrower’s
Remorse?
In the past five years, 16
percent of U.S. adults report they have obtained or refinanced a home loan and
two-thirds (65 percent) of those admit they want to do things differently when
shopping for their next home loan. Of the borrowers who want to do things
differently:
— 58 percent would like to compare terms
for loans on an apples-to-apples basis
— 56 percent would like fees standardized
and easier to understand
— 52 percent would like it to be easier to
shop around for rates
— 50 percent would like to get more than
one quote without sharing personal information
— 19 percent would want to learn more
about the mortgage process
— 15 percent would want it to be easier to
choose a lender based on other’s experiences