A recent study commissioned by Fannie Mae shows that homebuyers, especially when they are first starting out, should focus on getting a mortgage first, and then work on finding a home to buy. This is especially true for low- to moderate-income first-time home-buying households.
The importance of the research is that the lack of mortgage focus complicates the home purchase process. Getting a mortgage to purchase a home should be a major “focus” for homebuyers, and not be considered a “hurdle” to overcome.
Realtors and mortgage brokers, therefore, who can help homebuyers remain focused on the mortgage process throughout the entire process of buying a home, will be most successful.
This study tracked 14 low- and moderate-income first-time home-buying households throughout a 4-9-month period, depending on their stage in home purchase, with 10 in greater Boston, MA, and 4 in greater Knoxville, TN.
Specific research questions include:
- What are the different paths low- and moderate-income households take as they seek to become homeowners? What barriers do they face and how do they overcome them?
- What is the role of the mortgage (home purchase financing) in the entire home-purchase journey?
- How do they shop for a mortgage? Who are the influencers?
Homebuying Process Must “Focus” on the Mortgage Process
When a deal falls through because a homebuyer cannot get a loan to buy a home, everyone is frustrated. The homebuyer is embarrassed and frustrated with the entire process, while the Realtor and lender are frustrated because they have wasted a lot of time and money.
Fannie Mae’s study shows that the problem is often a result of homebuyers not being focused on getting a mortgage to buy a home, especially first-time homebuyers who have never experienced the process.
In Fannie Mae’s study:
- Research participants faced multiple barriers that included income instability and insufficient credit. This resulted in a prolonged and complicated home purchase process.
- Research participants were not focused on getting a mortgage. Rather, they considered it a hurdle.
- During the whole home-buying process, research participants focused overwhelmingly on the home search rather than the mortgage.
Focusing on the Mortgage is of Paramount Importance
Focusing on the mortgage throughout the entire homebuying process is of paramount importance.
Homebuyers who focus on finding a home, rather than getting a mortgage to purchase a home, often run into obstacles that frustrate and hinder the homebuying process.
Homebuyers who are focused on a mortgage:
- Focus on getting a mortgage (e.g., how to get a mortgage, what lenders to work with, and when to get started), before focusing on the home search.
- Educate themselves in detail about mortgages and how they work, before getting pre-qualified or pre-approved.
- Re-evaluate mortgage choices after becoming pre-approved, and throughout the entire homebuying process.
- Comparison shop and carefully compare the fees of a mortgage.
Video: Shopping for a Mortgage
Result: Buying a Home While Focused on the Mortgage
When a homebuyer is thoroughly focused on getting a mortgage to buy a home, the home purchase process goes much more smoothly. And in the end, there is less frustration on the part of everyone involved.
Perhaps best of all, fewer deals fall through, homebuyers are happy with their new home, and the Realtor and mortgage broker are satisfied with helping their client and earning an income.
Marimark Mortgage serves the mortgage needs of homebuyers, homeowners, and investors in Florida, Virginia, and Pennsylvania.
We specialize in conventional home mortgages, FHA, VA and USDA mortgage options, refinance loans, and reverse mortgages. We’ve worked extensively with cash-out refinancing, and help clients with HARP refinancing to lower their monthly mortgage payments.