Recent studies conducted by PenFed Credit Union and Freddie Mac have identified the most common financing assumptions among buyers.
Assumption 1: It’s not necessary to shop around for a mortgage.
Even with rising interest rates, 2/3 of home buyers only request one quote.
Truth: 80%t of borrowers who reviewed one additional quote saved upwards of $2,000, and those who requested five quotes saved up to $3,900.
Assumption 2: The lowest rate mortgage is the best one.
Unfortunately, 44% of home buyers think the lowest rate is the best option.
Truth: Factors like closing costs and the APR of the loan should also be considered. Additionally, working with a trusted lender can offer peace of mind and a smoother financing process.
Assumption 3: ARMs are risky loans.
58% of survey respondents believe that ARMs are for risk takers.
Truth: A 5/5 ARM offers a fixed rate for the first five years and often has lower payments than the typical 30-year fixed-rate mortgage, making it an excellent option for buyers planning to move within five years.
Assumption 4: Pre-qualification and pre-approval are the same.
30% of buyers think they are the same and 22% were unfamiliar with the differences.
Truth: Pre-approval puts financing at a buyer’s fingertips and can make their offers more attractive to sellers.