Survey Reveals Consumer Misconceptions About Mortgages

The reason that more people aren't applying for mortgages is simply because they're afraid of being declined, a recent survey by Wells Fargo suggests.

According to ‘How America Views Homeownership,’ a nationwide survey of 2,017 adults by Wells Fargo and Ipsos Public Affairs, 64% of respondents believe they must have a ‘very good’ credit score to obtain a mortgage, while 30% believe that only individuals with high incomes can buy a home.

The survey also reveals that U.S. consumers think they know more about mortgages than they really do. For example, two-thirds (64%) said they are knowledgeable about how much of a down payment is needed to buy a home, yet nearly half (44%) believe that a 20% down payment is required. (Could it be that lenders need to build greater awareness of Federal Housing Administration loan programs?)

What's more, many respondents said that not having enough for a 20% down payment was the main thing holding them back from applying for a mortgage.

Nearly half (44%) said they knew little or nothing about the closing costs associated with buying a home – something which could change once the Consumer Financial Protection Bureau's new ‘Know Before You Owe’ forms and rules take effect on Aug. 1 next year.Â

Interestingly, about half of the respondents felt they didn't have access to homes that fit their needs financially – which could mean that many of the houses for sale are simply too large.

‘Although the home buying 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,’ says Franklin Codel, head of Wells Fargo Home Mortgage Production, in a release. ‘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. This would help demystify the home buying experience for many consumers.’

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