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Nearly 90 percent of U.S. adults know Kim Kardashian and Kanye West have four children and 70 percent know about the reunification of Bennifer — the name for 2000s super couple Jennifer Lopez and Ben Affleck.
However, according to Zillow’s latest real estate survey, only 33 percent of adults know the benefits of getting pre-approved for a mortgage. The majority of survey respondents believed pre-approvals help buyers lock in lower rates — a major misconception about the mortgage process.
Down payments also mystified homebuyers, who assumed mortgage insurance (PMI) applied to all transactions when in fact, it only applies to down payments of less than 20 percent.
“Determining a down payment amount and when private mortgage insurance (PMI) is required is an important financial decision to make when purchasing a home, as it can have a big impact on the monthly payment,” Zillow explained. “Many survey respondents assumed PMI is required no matter what, but the only instance when it’s not required is on a conventional loan with a down payment of 20 percent or more.”
Homebuyers also misunderstood cryptocurrency and the purpose of home appraisals, offering earnest money, and several other transaction basics. The only factor respondents had a good grasp of is credit scoring, with the majority understanding payment history is crucial to a good score.
“The real estate process can be complicated and confusing, but it doesn’t have to be,” Zillow home trends expert Amanda Pendleton said of the survey results in a written statement. “By educating themselves on basic real estate fundamentals and hiring experts to help guide them through the process, buyers can avoid costly pitfalls and put themselves in a stronger competitive position.”
Real estate professionals have highlighted Americans’ real estate knowledge gap throughout the pandemic, as first-timers particularly struggle to navigate a volatile market. Knowledge — they’ve said — is a key factor in helping consumers make smart decisions fast.
“Spend a lot of time on the financial profile to check their cash flow as well as their assets, and just as important, their debt,” Inman contributor Ellen Sykes wrote in May. “Although people think they know how much money they have, it’s not until it’s all down on a spreadsheet that they really find out. Sometimes there is a pleasant surprise, and sometimes some very unpleasant ones.”
She added, “The financial profile dictates what they can afford and that, in turn, determines where they can look and what kind of property they can buy. It may be that the reality is different from the expectation, but [our] job is to show them how to turn that reality into something they can make work and with which they will be happy.”