Most Buyers Seek Financing Before Showings

The first step buyers most often take in their home shopping pursuit is to check up on financing and to make sure they can even afford a home, according to a new survey of 1,000 recent buyers. The survey was commissioned by loanDepot and mellohome, a real estate services provider. The majority of these customers—nearly 74 percent—sought financing first in their homebuying journey before looking at homes. For first-time buyers, that percentage jumps to 85 percent.

“This is definitely a shift from 10 years ago,” says Chris Heller, CEO of mellohome. “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.”

Heller says that buyers are learning that getting their financing in check upfront can better prepare them to shop for a home “with confidence and puts them in a more advantageous, competitive position, especially in tight markets.” A preapproval letter for financing can help when they go to make an offer, he says.

Buyers Are Paying Less in Closing Fees than in 2014

Closing costs dropped 7.1 percent year-over-year, falling from $1,989 in 2014 to $1,847 in 2015, according to a newly released Bankrate.com survey. The Bankrate analysis requested Good Faith Estimates from up to 10 lenders in large cities for a hypothetical $200,000 mortgage for a single-family home assuming a 20 percent down payment.

While average origination fees were down about 22 percent in this year’s survey, average third-party fees rose nearly 22 percent.

However, industry leaders are warning that mortgage lending and its costs will likely rise, notably on title insurance. We agree and suggest you seek today’s buying opportunities!

Source: “Even as Mortgage Closing Costs Drop, You’d Better Shop Around,” Bankrate.com (Aug. 3, 2015)