Borrower Data Provides Insight
By: Mary Miller, Zillow Director Product Management, Mortgages | April 3, 2008
As part of the product planning for Zillow Mortgage Marketplace, we conducted research on borrower behavior, perceptions and concerns. The findings helped guide our thinking and shape the final product features. You can check out some survey highlights in our press room. Below are several interesting facts from recent surveys of the U.S. population1 and Zillow users2 worth noting:
People are still shopping for loans
One-third of homeowners say that despite any home value change over the past year, they are equally or more likely to do each of the following in 2008:
- 35% — Refinance or take out a second mortgage
- 33% — Sell their home
- 32% — Take out a home equity loan
Time Spent Shopping Doesn’t Match Investment
In the table below, we highlight the typical hours spent shopping for a number of home-related purchases. It’s surprising to see that U.S. adults spend more time shopping for a car purchase and just as much time for a vacation as they do a home loan, despite a significant difference in dollars invested. Additionally, the data shows that Zillow users typically spend more time than all U.S. adults shopping for loans, new homes, home improvements, and even televisions. This supports what we know: Zillow users like to be informed and are typically more engaged in the decisions that affect their homes.
When we looked at the data across regions, we noted some variations. On a regional basis, people in the Midwest spent the most time shopping for mortgages or home loans—almost twice as much time as those in the South and Northeast.
Majority of Loan Shoppers Have Concerns
Of U.S. adults who plan to shop for a home loan in the future, 82% have concerns about doing so. More have concerns about having their personal information sold or shared than about getting the best rate. However, the top concern among younger borrowers aged 18-34 is ending up with a payment greater than their budget, likely because younger adults tend to have fewer assets and relatively lower incomes.
Help for Loan Shoppers
Of U.S. adults who plan to be in the market for a home loan in the next year:
- 91% agree that a standardized quote form would make it easier to compare loan quotes from multiple lenders
- 82% say the recent rate cuts by the Federal Reserve make it more attractive to shop for a loan
- 77% say they would obtain more mortgage or home loan quotes if they could do so anonymously
Whether you’re currently in the market for a home loan or plan to be in the future, we hope you’ll try Zillow Mortgage Marketplace as part of your loan research process. We’ve incorporated valuable feedback through our development process to address some of the primary concerns and interests of borrowers today. This is just the beginning. We will continue to gather valuable input from consumers and lenders as we help them connect through Zillow Mortgage Marketplace.
Watch here for future updates on interesting metrics and data we obtain as the marketplace grows.
Sources:
1) Harris Interactive Survey. Conducted online on behalf of Zillow.com, March 2008. Hours shown are median number of hours among adults who purchased each item and spent at least one hour researching and shopping before doing so. Full details and methodology of survey are available upon request.
2) Zillow User Survey, March 2008.
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Comments
8 Comments so far
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DrBoyce on April 7, 2008 10:44 pm
Although many people might say that they want to do a loan, as mentioned, the dilemma is that 26% of US borrowers will NOT qualify for traditional financing offered now. The net impact is that homes sales (new and resale) will continue to suffer…pulling down the total US economy…and there is nothing (in reality) being done about it. With no more $0 Down loans (except VA) and tighter regulations on FHA - it’s going to be a BAD summer selling season for most of us veteran Realtors - anyway you slice or dice it.
Consumer confidence in the mortgage industry is abysmally bad until some ‘genius’ realizes that they’d better make it easier to get consumers a loan to help sell off 10-18 months of housing inventory in MOST real estate markets across the country!
Dean Sukeena on April 8, 2008 7:19 am
The credit cruch is more substancial than the vast majority of consumers realize. The secondary market is also becoming less liquid because of a diminished desire for MBS. This is a huge problem.
Daniel on April 8, 2008 2:18 pm
This is very useful information thank you very much! I’m a loan officer and look forward to checking out your application.
People are still shopping for loans « Your Loan Officer. on April 8, 2008 3:07 pm
[...] Read more of the insights and graphs from the ZillowBlog. [...]
Corwin Grant on April 9, 2008 11:16 pm
The fact that many people are still looking for loans is irrelevant to the current market. There are millions of people on the verge of foreclosure. There are as many unable to get a loan, and a small percentage that can are going to find prices so low due to a flooded market.
James on April 16, 2008 3:26 am
It’s no surprise foreclosures on single homes keep rising. And it should be no surprise that real estate scams are on the rise. Real estate scams have been around for a long time. It should be nothing new that these scammers prey on the desperation of others. Here are a few simple tips a pre foreclosure homeowner can use to prevent a scam. When they are contacted by these self proclaimed real estate investors or short sale experts or consultants, find out if they have a real estate license. If they do have a real estate license you can check with your state board for their license. And it is a good chance that are in good standing or they disciplinary action taken against them. If they do not have a RE license look for the following clues to recognize a scammer. The “paperwork” means deed your house over. This is a big no no while facing foreclosure. They encourage you to just walk away from the foreclosure. Don’t dot it. They want to the “paperwork” signed right now. Do not let them pressure you in signing any paperwork. ALWAYS take 24 hours to read it. Or just wait for one day. If it sounds to be good to be true it probably is not good. http://24hrhousebuyers.com
MyPhoenixMLS on April 23, 2008 9:55 am
Thanks for a very interesting post.
The subprime mortgage mess – which, as we know, has come to affect people with prime mortgages as well – should teach us that we need to be as careful about choosing the right mortgage as we are about choosing the right home.
So here are four tips for choosing the right mortgage. To learn more, download the free report, 10 Home Finance Mistakes You Can’t Afford at http://www.myphoenixmls.com.
Tip #1: Decide how much you can comfortably afford to pay each month
During the housing boom, a lot of homebuyers got themselves in trouble by taking out mortgages with monthly payments that were more than they could comfortably afford. Some took out mortgages with low initial interest rates that are now resetting to much higher rates – dramatically increasing their monthly payments.
When thinking about your different mortgage options, make sure that you’ll feel comfortable with the monthly payment in any scenario (that means if you take out an adjustable-rate mortgage, you’ll be able to make the monthly payment even if the mortgage adjusts to the highest rate). Many homeowners have learned the hard way that they couldn’t count on being able to refinance into better mortgages before their loans reset.
Your mortgage lender will be able to help you determine how mortgage loan amounts translate into monthly payments. You can also use Bankrate’s online mortgage payment calculator, available at http://www.bankrate.com.
Tip #2: Get the best mortgage given your unique situation
To decide which mortgage will be best for you, follow these 5 steps:
1. Educate yourself on the differences between fixed rate mortgages and variable rate mortgages.
2. Ask yourself: How long am I planning on owning this home? If you plan on being there for the long haul, a fixed rate mortgage may be your best bet.
3. Understand how current interest rates compare to historical rates. If interest rates are low compared to historical standards, now may be the time to lock in a fixed rate, unless you’re sure that you’ll be moving in the next few years.
4. Think about your risk tolerance. Fixed rate loans are the least risky.
5. Analyze your budget as well as the difference between current fixed rate interest rates and variable rate interest rates. If the difference is small, the added risk may not be worth the savings.
Tip #3: Get a mortgage pre-approval before you start house hunting
You’ll get a better mortgage – and a better deal on your house – if you get a pre-approval from a lender before you start house hunting.
A pre-approval is a binding statement from a lender of the amount of money you qualify for. (In contrast, a pre-qualification is a non-binding estimate of how much you would qualify for.) Pre-approvals are typically good for 90 days, and you usually have to pay a fee to get one. Of course, pre-approvals are contingent upon your financial situation (and the value of the house) staying the same.
One benefit of getting pre-approved is that it will allow you to confidently negotiate better loan terms with different lenders, because you can say “I’ve been pre-approved with Bank Y, and they’re offering X, but I’d like to do business with you if you can give me a better deal.”
Tip #4: Get help
Buying a house is a big decision. And choosing the right mortgage can save you thousands of dollars, many sleepless nights, even your home. So why do it by yourself? A trustworthy mortgage lender can help guide you through the mortgage process.
Loan Modification Zoom on May 6, 2009 4:38 pm
Hmm.. Interesting post! Homeowners can definitely take advantage of the historically low interest rates and purchase a home with low mortgage payment.