According to survey results released by Radian Guaranty Inc., a Philadelphia-based provider of mortgage insurance products and services, 52 percent of all U.S. homeowners said they were not at all or only somewhat knowledgeable about the mortgage options available to them at the time they purchased their homes. Harris Interactive, a market research firm based in Rochester, N.Y., conducted the survey on behalf of Radian.
"These survey results suggest that lenders and others in the financial services arena have a real opportunity to help Americans by educating them about their personal finances, particularly the many mortgage options available to homebuyers," said Mark Casale, executive vice president of mortgage insurance for Radian. "A home is generally the largest purchase individual Americans will ever make, and they have a right to know how to find and negotiate the best deal they can make for themselves."
According to the survey, two-thirds of Americans own their homes and 47 percent have a home mortgage.
Among all homeowners, only 48 percent said they were knowledgeable or very knowledgeable about the mortgage options available to them when they were purchasing their homes. Those claiming to be knowledgeable or very knowledgeable about mortgage options were most likely to be homeowners over the age of 55 (55 percent), divorced, widowed or separated (54 percent) and have at least a college education (51 percent). In general, similar proportions of male and female homeowners said they were knowledgeable or very knowledgeable on the subject at the time of purchase (46 percent and 49 percent, respectively).
Slightly larger proportions of homeowners in the Northeast (50 percent) and West (50 percent) consider themselves knowledgeable or very knowledgeable about mortgage options, as compared to homeowners in the South (46 percent) and Midwest (45 percent).
Fifty-one percent of homeowners who had secured a mortgage on their primary residence within the last two years felt knowledgeable or very knowledgeable about mortgage choices, while 59 percent of homeowners who secured a mortgage three or more years ago felt not at all or only somewhat knowledgeable.
"In recent years, many more mortgage options and financing choices have been made available to homebuyers. It makes sense that those who purchased or refinanced a home recently would feel more knowledgeable about their mortgage options than those who have not," said Casale.
Advice to new homebuyers
When asked what advice they would give to a prospective homebuyer about the process to obtain a mortgage, homeowners said that first and foremost, homebuyers need to understand just how much of a home they can afford to purchase (55 percent mention this as the first or second piece of advice they would give), followed by researching and determining the best mortgage options available that would suit their needs (45 percent) and getting pre-approved for a mortgage before searching for a home (36 percent).
"Homeowners in this survey have the right idea," said Casale. "Those who are entering the market for the first time or who are looking to move up need to first determine what they need in a home and how much home they can afford. Certainly, having the foresight to get pre-approved will help prospective buyers focus on the right price range for their home buying search."
For more information, visit www.radian.biz.