Housing starts continue to rise across the country, and according to TD Bank’s latest Mortgage Service Index, there are good reasons why. Of American homeowners, 56% feel it’s a “good time” to buy a home while 71% say their most recent home buying experience was “very good” or “excellent,” which is up nearly 10% in the last two years.
The rise is customer satisfaction comes at a time when the mortgage process has grown more time consuming, with new loan and closing disclosures forms debuting last fall. To wade through the process, twice as many respondents say their Mortgage Loan Officer was their most valuable resource during the home-buying process than in 2015.
“Our data demonstrates that home buying sentiment is improving, but lenders still need to adopt a more omni-channel approach to providing financial guidance and expertise," said Kevin Gillen, senior vice president of Mortgage at TD Bank. "Consumers should find a lender who can educate and support them on all aspects of the mortgage process. By understanding the process they will enjoy a more positive home-buying experience."
Here are some other highlights from the report:
Home Buying Sentiment
While sentiment is on the rise, significant stress factors remain.
· According to the survey the most positive aspects of the home purchase include getting approved for a mortgage, finding a good realtor, and finding the right lender.
· Forty-two percent of Americans expect the housing market to improve over the next six months, while 56 percent felt it’s a "good" time to buy a home.
· One in five consumers were "extremely likely" to purchase a new home in the next year, especially Millennials (38 percent).
· Thirty-four percent of Americans had an "excellent" experience with their lender, up from 28 percent in 2015; however, nearly one-third (32 percent) reported their home purchase was “very to extremely stressful”.
Positive Home Buying Experience, But There's Room for Improvement
Year-over-year, homeowners are relying more on their lenders' expertise, but there's still room for improvement.
· More than half of respondents rated their lender as “excellent” or “very good” in responsiveness, mortgage rate and terms, honesty and transparency, accessibility, and keeping them informed.
· The top three areas that mortgage banks needed to improve on include adding more information online, training frontline staff and offering home financing seminars or workshops.
· Millennials said the best way banks could educate them on the mortgage process was to add more online information and resources. (67 percent).
· Sixty-two percent of respondents spent close to $2,000 in unexpected costs during the mortgage process, while almost half of Millennials incurred up to $5,000 in unexpected costs.
Homeowners Leveraged Unconventional Strategies during the Mortgage Process
New resources and lending options such as first-time home buyer loans and affordability programs allowed buyers to make down-payments of less than 20 percent.
· The number of home buyers who researched their lenders through social media doubled over the last two years, up to 14 percent in 2016.
· Over half of those surveyed put down less than 20 percent when purchasing their first home.
· Thirty-two percent of respondents financed their home with a mortgage affordability program, including 56 percent of Millennials.
· Almost a quarter of Americans share a mortgage with someone other than a spouse (42 percent, among Millennials.
· Twenty-six percent of homeowners purchased a home with their significant other before marriage.
"With today's increasing home prices and the anticipated rise in interest rates, choosing a first-time mortgage or affordability program can be a great way for consumers to enter the housing market," said Gillen. "TD Bank continues to make financing more manageable by offering flexible loan options to buyers at all income levels. Buyers embarking on homeownership should understand that finding a lender that provides ongoing communication and diverse loan options is critical to a smooth, low-stress home purchase."
The Mortgage Service Index polled more than 1,300 American homeowners, who took out a home mortgage during the last 10 years and asked about their experience including, what factors helped them purchase a home.