- Zillow released a small study about the research habits of homebuyers when it comes to looking for home loans.
- Respondents spent an average of eight hours researching a home loan compared to 11 hours shopping for a car.
- Millennials led the pack in their loan research habits with 86 percent of this generation researching home loans and gathering an average of six quotes before making a decision.
- Although not outlined in the study, one of the causes of home loan low research times could be the difficulty in understanding the process, a problem that TRID was designed to help alleviate.
Survey participants on average reported spending eight hours — obtaining just four quotes from lenders — weighing home loan options, the same amount of time they would spend researching a vacation.
In comparison, respondents spent 11 hours shopping for a car.
Eighteen percent (or one in five respondents) spent an hour or less researching home loans. Over 50 percent of borrowers dedicate less than five hours to evaluating their home financing options, the survey showed.
What’s at stake
According to Zillow, the average home costs five times more than the average car and a whopping 80 times more than the average vacation.
When that statistic is broken down into dollars, a buyer in San Francisco can end up spending an extra $26,000 on a $300,000 home and an extra $43,000 on a $792,600 home.
“When it comes to spending money on our daily expenses, we all understand the value in taking time to shop around, compare product reviews online or research retailers to ensure we are making a wise purchase,” said Erin Lantz, vice president of mortgages for Zillow Group, in a press release.
“Yet surprisingly, very few prospective homebuyers apply that same diligence to choosing a lender and a home loan, despite the fact that is likely the largest purchase they will ever undertake. Unfortunately, that mistake could be costly — a small difference in the interest rate can add tens of thousands of dollars to your mortgage.”
Out of all age demographics, millennials lead the pack in researching home loans. Eighty-six percent of millennials shopped around for a loan, compared to 75 percent of Gen Xers and 55 percent of baby boomers.
Furthermore, on average, millennials got six quotes — two more than Gen X buyers and three more than baby boomers.
Zillow’s study suggests that student loan debts and rising rents are prompting millennials to approach the homebuying process more wisely, so they can save every dime possible.
According to a past Inman News article, “Everything you wanted to know about TRID, explained” the whole point of revamping the loan disclosure process was to make shopping for and comparing loans easier for consumers.
There have been various articles and studies that discuss the issues surrounding the implementation of TRID, with a special focus on the new Loan Estimate and Closing Disclosure forms, which aren’t all that much easier to understand than the old forms.
According to a survey done by Closing Corp, almost half of respondents felt the new forms weren’t easier to understand, and 51 percent of respondents experienced “unexpected costs, fees and surprises.”
The Consumer Financial Protection Bureau is currently working on ironing out the kinks in TRID, and will release a revised version of the rule in July.