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.
