Ellie Mae, a cloud-based platform provider for the mortgage finance industry, released its second annual Borrower Insights Survey at the Ellie Mae Experience conference on Tuesday. This survey explores the preferences of over 3,000 U.S. homeowners and renters, indicating results that give insights on issues such as what is keeping renters out of the homeowner market and misconceptions around downpayment and FICO score requirements, as well as indicating borrower desire for security and ease of the mortgage process.
The results explored the impact of an online presence over the decisions made by borrowers when conducting their research for mortgage options, finding that 31 percent of all homeowners surveyed conducted online research before applying for their loan. 21 percent of homeowners discovered their lenders through an online search, while 37 percent leveraged a combination of an online application and in-person interaction. Additionally, 16 percent of surveyed borrowers applied for their loan entirely online while 45 percent completed the process entirely in person.
When locating their most recent mortgage lender, the top three responses were as follows: 30.9 percent referred by a friend or family member, 21.1 percent discovered lenders online, and 16.3 percent referred by a Realtor. Additionally, 6.6 percent saw an advertisement, 6 percent received direct mail, and 3.9 percent received an email.
In the case of what is preventing current renters from applying for a loan or purchasing their own home, 23.7 percent say they do not believe they have saved enough for a home, 26.5 percent are happy renting and do not wish to buy a home, 13 percent have yet to find the right home to consider buying, and 10.7 percent responded that they do not ever wish to buy a house. Additionally, 30 percent of renters do not anticipate that they will ever apply for a mortgage.
The survey responses indicate an opportunity for education of potential and future borrowers on the financial requirements and perceived barriers to homeownership, with 36.1 percent of respondents believing they have not saved enough money for a down payment, and 9.9 percent stating that they do not qualify for a home loan.
“Surprisingly, almost half of the renters surveyed said that they thought they needed to put down a larger down payment than necessary to be able to purchase a home,” said Joe Tyrrell, EVP of Corporate Strategy at Ellie Mae. “With the range of loan products available today, including FHA loans, this simply is not the case.” Likewise, for credit scores needed to apply for mortgage loans, 33.9 percent responded that a 700-749 was necessary, 31.3 percent believed it was a 750-799, and 17.5 percent believed they needed a credit score of over 800.
In 2017, 44.7 percent of homeowners applied for their last mortgage fully in person, 15.8 percent had no personal interaction and applied fully online, while 21.1 percent of total respondents had a mix of in-person and online interactions while applying for their mortgage. Though 93.1 percent of homeowners stated that technology improved their loan process, security remains a top priority for borrowers, with 46.5 percent of homeowners being somewhat concerned with entering their personal information online, and 22.6 percent of respondents were very concerned with entering it. Overall, 30.4 percent of respondents said security was the most important aspect of applying for a mortgage online, followed by 23 percent desiring more simplicity, 22.5 concerned with the speed of the process, and 19.4 percent interested in the convenience.
The desire for a faster application process received the highest ranking with 29.1 of total respondent results for the improvement of the mortgage experience, followed by more face to face interaction and communication with lenders at 27 percent, and a simpler application at 26.8 percent.