Purchasing a home isn't exactly a drop in the bucket. At approximately $222,000, according to the National Association of Realtors, a median valued residence will typically take borrowers at least 30 years to pay off completely. Yet despite this major financial obligation, many aren't looking into the mortgage process as comprehensively as they ought to be, a new study suggests.
On balance, prospective car buyers will devote approximately 11 hours to research, nearly 25 percent more time than they do for home lenders, a recent study conducted by Zillow found. More specifically, consumers typically take 8 hours investigating their home financing options and acquire an average of four quotes.
Time planning vacation mirrors mortgage research
Perhaps even more revealing, Americans put the same amount of time into the next vacation they'll take as they do the home they'll buy, despite the fact that the cost of the average home is 80 times that of the typical getaway, the report found.
Erin Lantz, vice president of mortgages at Zillow, said there's no overstating the importance of doing your homework as a consumer.
"When it comes to spending money on our daily expenses, we all understand the value in taking time to shop around, compare product reviews online, or research retailers to ensure we are making a wise purchase," Lantz explained. "Yet surprisingly, very few prospective homebuyers apply that same diligence to choosing a lender and a home loan, despite the fact that is likely the largest purchase they will ever undertake."
He added that even a fractional difference in the interest rate for one mortgage over another can be a several thousand dollar difference over the life of a loan.
Fixed-term home loans average 3.5 percent
Mortgage rates have remained in highly affordable territory for well over a year now, at least among those who have good credit. Prime borrowers can obtain a 30-year fixed-rate mortgage at a 3.6 percent interest rate, according to the most recent estimates from Freddie Mac's Primary Mortgage Market Survey. That's virtually unchanged from last year. Meanwhile, 15-year FRMs average 2.9 percent, unmoved when contrasted with the same period in 2015.
Interestingly, millennials – ranging between 18 and 35 years of age – tend to be more conscientious about the home buying process, more so than those who are senior to them, the Zillow poll discovered. Furthermore, millennials are 11 percent more likely to compare quotes among mortgage companies versus members of Generation X and 22 percent more than baby boomers.
There's also some commonality among 18- to 35-year-olds for where they would most like to live. For the most part, millennials prefer to reside in the suburbs rather than the city or in rural neighborhoods, based on findings from the National Association of Realtors. Millennials account for 35 percent of all buyers, up from 32 percent in a previous poll. That's the largest segment of generational buyers, more so than both young and older boomers combined.