NEW YORK (MainStreet) — Becoming a homeowner used to be the centerpiece of the American Dream, but now, as a new MainStreet study has found, only 17% of Americans cited owning a home as their primary financial goal.
The roadblocks and speed bumps to getting a home loan could be a possible deterent, as many Americans take the easy route when they do go about getting a mortgage. A recent survey from Lending Tree found that nearly 40% of homeowners only obtain one mortgage quote before settling on a loan, despite the fact that nine out of 10 borrowers (91%) are aware that interest rates vary from lender to lender. Mona Marimow, senior vice president of Lending Tree, attributes consumers’ reluctance to shop around for a mortgage to their discomfort and lack of familiarity with the process.
“Mortgage rates are a commodity and you can negotiate them,” Marimow says. “Never just take the first offer.”
To help homebuyers lock in a mortgage that’s right for them, MainStreet lists out the steps to take when shopping for these loans.
According to Erin Lantz, director of Zillow Mortgage Marketplace, homebuyers also don’t comparison shop for mortgages because they’re bogged down by time constraints. Often, they find a home before researching their options, and then they need to finance it quickly. But in reality, Lantz says, most of the financing legwork should be done well before your search.
“From the time you apply for a mortgage to when it is funded typically takes about 30 to 60 days,” she says. “But the process starts much earlier than that.”
First, Lantz says, homebuyers need to gather the documents a lender will need to see when you’re filling out applications. This includes proof of income, tax statements and any documentation on assets. Homebuyers will also need to check their credit report since this plays a huge role in determining the terms of your loan.
“People with a score over 700 will pay one to one and a half percentage points less than someone who is the mid-credit score range,” Paul D. Golden, a spokesperson for the National Endowment of Financial Education, says. “Any way that you can improve your credit score can help you out tremendously.”
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