Home Buyers Don’t Grasp ‘Mortgage Basics’

Many Americans begin looking for a home to buy without understanding the fundamentals of applying for a mortgage or what it takes to qualify for one, according to a new survey by Ally Home, a direct-to-consumer mortgage business.

Ninety-two percent of the more than 2,000 U.S. adults who responded to the survey admit they don’t know how much mortgage they can afford. Further, most say they’re confused about “rates” versus “points,” and only a third have a general idea of what their average closing costs might be. Only 8 percent are aware that the maximum debt-to-income ratio is usually 43 percent; most respondents believe it’s significantly lower or don’t know at all.

Ally Home is touting its free Mortgage Playbook, a resource that covers the basics of applying for a home loan. The book uses sports jargon to outline the mortgage application process, covering topics such as how to improve your financial fitness prior to applying for a loan, how to evaluate rate and points options, and how loan rates are determined.

Source: Ally Financial

More Homebuyers Willing to Compromise?

Faced with tight inventories of homes for sale, more buyers are realizing they may have to bend a little in order to get the home they want.

According to a new survey by the real estate brokerage Redfin, 35 percent of real estate agents said that buyers are now “willing to pay more” to find a home compared to this summer. About 30 percent of agents also reported that buyers are more “flexible on features,” held “lower expectations” for how far their money would stretch, and were “looking to new construction” due to inventory constraints. Real estate agents also reported that homebuyers were more “prepared to waive contingencies” to win a bid.

Eighty-seven percent of the Redfin real estate agents surveyed cited “limited inventory” as the biggest challenge that homebuyers face nationwide.

While homebuyers may be getting more realistic about market conditions, the survey found that sellers are not. Sixty-three percent of agents said that sellers have “unrealistic expectations” about the value of their home. 31 percent of agents say that sellers also are frustrated with the number of homes available that they would be interested in buying.

Source: Redfin

Fewer Homebuyers Are Willing to Purchase Foreclosures

U.S. homebuyers are less likely to purchase a foreclosed property today than they were a year ago, according to a new survey conducted by Trulia and RealtyTrac. Some 45 percent of U.S. homebuyers say they are at least somewhat likely to purchase a foreclosure today compared with 55 percent who said the same a year ago.

Only 1 percent of homeowners with a mortgage say walking away from their home would be their first option if they are unable to pay their mortgage, while 59 percent say they would not consider walking away no matter how much their mortgage was underwater. More than two-thirds of homeowners (69 percent) say modifying their loan terms is their first choice if they aren’t able to pay their mortgage.

The survey also finds that fewer homeowners have a negative view toward foreclosure properties this year (78 percent) compared to last year (85 percent). Homeowners who believe there are negative aspects to purchasing a foreclosed home say they are most concerned that there will be hidden costs (68 percent), that the process is risky (49 percent) and that the home could lose value (35 percent).