Every year, millions of people get a mortgage, even though they
are complicated and can be anxiety-inducing.
But how did they do it? What was the most important factor in
their decision? Are they happy with their decision?
To find out, HSH.com commissioned an online survey in December
2012 which netted over 500 responses. (In several cases,
respondents were allowed to select more than one response.) Here's
a look at some of the findings:
What mattered most?
Survey participants were asked, "What was the most important
factor in your mortgage decision?"
Approximately 47 percent of the respondents said the interest
rate was the most important factor in their mortgage
19 percent said loan terms were of top importance
Nearly 18 percent said fees were most important
12 percent cited the lender's reputation
4.2 percent said some other factor was most important to
Picking the loan product
The quest for a low mortgage rate was particularly intense when
hit super-low levels in May, but today, borrowers are paying
attention to other factors, as well, says Fred Arnold, a mortgage
professional at American Family Funding in Santa Clarita,
"Previous to two months ago, it was all about the 30-year
fixed-rate loan," Arnold says. "Now, borrowers are looking at
options like the 7-year fixed or 10-year fixed. Rates for those are
about 1 percent lower than the 30-year fixed. So the decision
becomes: what's best for my situation?"
Borrowers who want to
are looking at 15-year loans, again because the rates are more
attractive, Arnold adds.
The mortgage rate, term and loan amount determine the monthly
payment, which is top-of-mind for most borrowers, says Gary Parkes,
a loan originator with Carrington Mortgage Services in
"The biggest thing is usually the monthly payment and whether
it's manageable or not for them," Parkes says.
Determining your down payment
Borrowers also need to consider their
and credit score, says David Krichmar, a mortgage banker with Core
Lending in Sugar Land, Texas.
Those issues tend to crop up at the prequalification stage and
can affect your loan choices. Borrowers who can put down 20 percent
typically want a conventional loan. Borrowers who have less than 5
percent to put down are limited to an FHA loan, or a VA loan which
allows a low or zero down payment without mortgage insurance.
"If they are limited by down payment, that takes a lot out of
the equation," Krichmar says.
Researching the mortgage
The survey asked borrowers how they researched their
34 percent said they consulted a mortgage broker
24 percent said they found information online
17 percent reported that they called a few lenders
Friends and family:
An equal proportion turned to family or friends for advice.
Would you use the same lender again?
The survey also asked borrowers if they'd use the same lender
again if they decided to refinance:
Nearly 75 percent said they'd use the same lender again
Yes, and I would refer:
Nearly 38 percent said they'd refer other people to their
18 percent said they'd already done so
7 percent said they probably wouldn't refer their lender to
6.6 percent said they definitely wouldn't do so
Complaints included inadequate service, poor communication, fees
that were perceived to be too high, dissatisfaction with loan
requirements and a preference for a local lender. Respondents also
said they wouldn't be repeat customers because their lender was in
bankruptcy or had accepted "bailout money" from the federal
government during the financial crisis.
Fixed rates dominant
Survey respondents were also asked about their mortgage:
64 percent said they had a 30-year fixed-rate loan
23 percent said they had a 15-year fixed-rate loan
3.7 percent said they had a one-year adjustable-rate
2.8 percent said they had a 5/1 ARM
Approximately half of the respondents said their mortgage
currently had a rate in the 3- or 4-percent range. Sixteen percent
said their rate was lower than 3 percent, and 33 percent said their
rate was higher than 5 percent.
To wrap up, Krichmar points out that being prequalified for a
certain loan amount doesn't mean you'll be comfortable with that
loan. And your comfort level is the real bottom line when choosing
a loan that's right for you.