Lack of knowledge and misinformation may be discouraging Americans from buying a home according to a recent survey sponsored by Wells Fargo & Company. The survey, conducted in June by Ipsos Public Affairs, found that many prospective homebuyers do not take the plunge because of uncertainty about their ability to qualify for a mortgage or about navigating the homebuying process.
The survey, “How America Views Homeownership,” found that many Americans say their financial houses are in order. Eighty percent said they know how to handle their personal financial affairs and 82 percent claim they generally don’t spend beyond their means. Only 27 percent said that they tend to spend their money and not think twice about it. Sixty-three percent, including more than half of the millennials (ages 18 to 34) in the survey, said they have a “rainy day fund.” These factors, the bank says, all improve on the ability to buy a home.
“Although the homebuying process has changed in many ways in recent years, our survey found Americans still view homeownership as an achievement to be proud of and many believe that now is a good time to buy a home,” said Franklin Codel, head of Wells Fargo Home Mortgage Production.
When it comes to buying a house 74 percent of respondents surveyors that they “know and understand” the financial process involved, but other responses indicated that this may not really be the case. For example, Wells Fargo said that, while 68 percent of Americans feel it is now a good time to buy, almost a third – 30 percent – of survey respondents think that only individuals with high incomes can obtain a mortgage and 64 percent believe that someone must have a “very good” credit score to buy a home.
The survey found that while 64 percent claimed to be knowledgeable about downpayment requirements, 44 percent think that a minimum of 20 percent is required and a lack of these funds was cited by respondents as one of the biggest barriers to owning, especially for millennial respondents, age 18 to 34. Forty-four percent also admitted to knowing little or nothing about closing costs for a home purchase and about half said they feel they lack access to homes that meet their needs financially.
All of this, the bank says, points to the need for more homebuyer education. “Our survey also suggests we have an opportunity as lenders, nonprofit agencies and real estate agents to better inform Americans about credit ratings, mortgage costs and housing affordability,” Codel says. “This would help demystify the homebuying experience for many consumers.”
“It is important for prospective homebuyers to feel empowered to ask lenders and real estate agents questions about available options, such as down payment assistance or FHA loan programs or VA loans for veterans,” he continued. “Ninety-five percent of survey respondents said they want to own a home if they don’t already. Informing prospective homebuyers about their options is the first step toward helping them realize their goals.”
The Well Fargo/Ipsos Public Affairs poll was conducted from June 3-16, 2014 with 2,017 adults. They were interviewed on-line and the data were weighted to ensure that the sample’s age/sex composition reflects that of the actual U.S. population according to Census information.