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A new report from Zillow has revealed that understanding mortgages is a struggle for most homebuyers, but also that a majority of buyers lean on their agents to make sense of their financing options.
The report, out Monday, specifically shows that 55 percent of all successful buyers turn to their agents or brokers for education regarding home financing. First-time buyers turn to agents in even greater numbers, with 58 percent indicating that they go to agents for information. Among repeat buyers, 53 percent turn to their agents.
By comparison, only about a third of all buyers turn to financial institutions such as banks for mortgage education, and fewer than a third rely on websites. Just 29 percent rely on friends to help them make sense of their mortgage options.
That means agents are overwhelmingly the most popular way for real estate consumers to learn about their financing choices.
The survey results will likely come as good news to many of real estate’s major brands; big names such as Compass and Redfin have made major investments in their mortgage operations. The fact that consumers rely on agents means it should be theoretically possible for agents and their brokerages to capture more dollars by funneling people into their own lending ecosystems.
In any case, Zillow’s new report also shows that mortgages tend to be a point of stress for consumers. For example a majority, or 56 percent, ranked understanding the costs associated with their mortgage as among the three most difficult financial issues to make sense of during their homebuying journey. By comparison, only 45 percent of consumers ranked understanding how much they could afford as among the top three most-difficult issues to figure out.
The report is based on a December survey of 665 successful buyers and 1,908 prospective buyers. Successful buyers were those who bought a home in the last two years, and prospective buyers were people who intended to buy a house in the next year.
The report specifically focuses on the financial components of buying a home, and so doesn’t discuss other recent trends such as the COVID-19 pandemic, housing preferences or an array of other issues.
But even so, it does suggest that the complicated process of financing a home remains a significant point of stress for many consumers. At the same time, the findings also hint at opportunities for agents and companies that can provide information and make the lending process more user friendly.
Other findings in the report include the revelation that slightly more than a quarter of homebuyers, or 28 percent, are stressed about saving up for a down payment; that 71 percent of buyers reported making at least one sacrifice such as foregoing entertainment or vacations to save up for a home; and that 73 percent of buyers indicated they paid some form of mortgage insurance.
The report additionally reveals that about a third of buyers reported getting some form of down payment assistance or grant when buying a home. The most common source of assistance mentioned in the report was a bank. Other sources include credit unions, non-profits and the government.