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 home buying 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.
Home buyers reported more anxiety about the housing market and the tight inventories of homes for sale. Nearly 67 percent reported that finding the right home was not easy, followed by stresses over coordinating paperwork and the overall home loan experience. Buyers described the homebuying process most commonly as “time consuming” and “challenging.” Further, the time it takes to secure a mortgage was listed as a top stressor among the majority of buyers surveyed.
Also, buyers expressed concerns that their real estate agent and loan consultant weren’t communicating with one another. But that may stem from miscommunication, researchers note.
“On 100 percent of transactions, agents and lenders are talking with one another,” says Heller. “The fact that customers aren’t aware of that tells us that more transparency and thorough communication by the real estate professional is warranted. We all need to do a better job.”
