Report: Vast majority of first-time home buyers shop for financing first

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The housing crisis brought many changes to the real estate industry, one of which was an increased wariness among buyers of repeating mistakes of the past. One positive outcome is a greater focus on financial readiness for homeownership.

Buyers today are more likely to start their home search with a home financing consultation than by shopping for a house, according to a survey of recent home buyers by LoanDepot and Mellohome, the real estate services-provider branch of LoanDepot. The survey found that 74 percent of buyers looked into their home financing options before shopping and, among first-time buyers, that number jumps to 85 percent of buyers.

The survey found that getting a loan preapproval before finding a real estate agent or a house is valued by buyers, because it gives them confidence and an understanding of what they can afford. In addition, a preapproval is essential in a competitive market where homes sell quickly and sellers have a choice of offers.

Sixty-seven percent of buyers in the survey said that finding the right home was the most difficult part of the process, followed by coordinating paperwork (64 percent) and the overall home-loan experience (59 percent).

A common concern cited by buyers related to communication, particularly about loan fees and how to find the right loan. In addition, a quarter of respondents said their real estate agent and loan consultant didn’t communicate with each other. However, according to Mellohome, agents and lenders always talk with each other during a transaction; they just don’t always make that clear to their buyer clients.

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