Study finds more time spent researching car purchases than home loans
Study finds more time spent researching car purchases than home loansMortgagePress.comHarris Interactive, Zillow.com, major home improvements, planning a vacation Borrowers plan to secure more quotes in the future Despite the fact that a home is one of the largest and most expensive purchases most Americans will ever make, those adults who have obtained or refinanced a home loan in the past five years typically spent only five hours researching a home loan, according to a recent survey¹ of 2,897 adults conducted by Harris Interactive on behalf of Zillow.com. In fact, more time is typically spent researching a car purchase (eight hours) or major home improvements, such as a kitchen remodeling (10 hours), and equal time is spent planning a single vacation (five hours)². When calculated as time spent per dollar invested, this means Americans typically spend nearly 80 times more time researching their vacation (.159 minute per dollar) than a home loan (.002 minute per dollar). More quotes expected on future home financing activity In retrospect, borrowers seem to indicate a desire to be more informed in the future. Those who obtained or refinanced some type of mortgage or home loan in the last five years secured an average of four quotes, but those who plan to obtain or refinance a mortgage or home loan within the next year say they expect to obtain six quotes, on average. Home-related investment Typical hours of research² Average cost Minutes spent per dollar Vacation 5 $1,883³ per week .159 Mortgage or home loan 5 $135,313&sup4 (home) .002 Car 8 $28,715&sup5 .017 Home 39 $224,890&sup6 .102 Major home improvements 10 $47,500&sup7 .013 Computer 4 $3,000&sup8 .080 Television 2 $783&sup9 .153 Borrowers have concerns about securing next home loan Of adults who say they plan to be in the market for a mortgage or home loan in the future (mortgage, refinance, home equity line of credit or other home loan), 82 percent say they have concerns about doing so. The top five concerns are: •Having personal information sold or shared with multiple lenders (58 percent); •Sharing personal information and credit score with multiple lenders (55 percent); •Missing the opportunity to get the best rate (54 percent); •Ending up with a monthly payment that is greater than the original budget (48 percent); and •Not understanding the terms and financial implications of the loan (41 percent). "What most people don't realize is the type and terms of a loan are often more significant than the actual purchase price, as these factors can dramatically affect the affordability of a home," said Zillow Chief Financial Officer Spencer Rascoff. "Financing a home is one of the largest investments most people will make in a lifetime, yet people typically put more time into buying a car and as much time into researching a single vacation than they do a home loan. Despite this clear imbalance of effort, we're encouraged that borrowers, on average, say they plan to secure more quotes on the loan they plan on obtaining or refinancing within the next year, which we think signals a desire for greater options and information to help alleviate the primary concerns of borrowers." Potential and future borrowers Of those who plan to be in the market for a home loan in the next year: •Nine out of 10 (91 percent) agree that a standardized quote form would make it easier to compare loan quotes from multiple lenders. •Eighty-two percent believe the recent interest rate cuts by the Federal Reserve make it more attractive to shop for a home loan. •Seventy-seven percent say they would obtain more mortgage or home loan quotes if they could do so anonymously. •Sixty-one percent rely/would rely on others' input when selecting a mortgage lender. •Fifty-six percent would obtain more mortgage or home loan quotes if they had more time to do so. For more information, visit www.zillow.com. Footnotes 1-The Home Spending Survey was conducted online by Harris Interactive within the United States on behalf of Zillow.com between March 6 and March 10, 2008 among 2,897 adults ages 18 and up, of whom 1,821 are homeowners. This online survey is not based on a probability sample, and therefore no estimates of theoretical sampling error can be calculated; a full methodology is available. 2-The median number of hours among adults who purchased each item and spent at least one hour researching and shopping before doing so. Sample sizes vary. 3-AAA 2007 Vacation Costs Survey. Cost per day for a family of two adults and two children. 4-Based on averaging loan type data from the Mortgage Bankers Association's Residential Mortgage Market and Its Economic Context 2007 report. 5-Auto Affordability Index compiled by Comerica Bank in Detroit for the fourth quarter of 2007. 6-Zillow Q4 Report Zindex Median Home Value Indicator. 7-Based on averages from Remodeling Magazine. 8-WikiAnswers. 9-Consumer Electronics Association.