According to a new survey conducted by Fannie Mae, many Americans do not adequately investigate, or they fail to understand fully, the choices available to them when shopping for a mortgage.
‘Homeowners who don't obtain multiple mortgage offers or carefully compare rates are essentially leaving money on the table, particularly given today's unprecedentedly low interest rates,’ says Fannie Mae Chief Economist Doug Duncan. ‘Although a home purchase is the largest financial obligation most people will ever make, many borrowers do not fully understand their mortgage products and costs. As a result, some homeowners in this position may find themselves with unsustainable payments down the road.’
Fannie Mae reports that more than three out of four higher income respondents said that competitive offers would have a major influence on their choice, which is more than 20 percentage points higher than lower income respondents. Furthermore, Fannie Mae's data shows that higher income respondents are more comfortable using technology such as mobile devices and online research in the mortgage shopping process.
However, across all income groups, consumers are less comfortable obtaining mortgage quotes or the mortgage itself using a mobile device. The survey results also find that a substantial portion of all consumers do not understand key mortgage elements – 41% of survey respondents said they were unable to estimate the maximum percentage by which the monthly adjustable-rate mortgage payment can increase over the life of a loan.