Homebuyers are using low down payment to navigate the tight inventory squeeze this spring buying season according to a survey on mortgage and home equity sentiment conducted by TD Bank.
The survey, which focuses on understanding consumers’ home buying experience as well their attitudes and experiences on obtaining a mortgage and a Home Equity Line of Credit (HELOC), found that 54 percent of recent homebuyers noted a limited selection of homes available to fit their wants and needs even though half of the homeowners surveyed said they took less than six months to buy their most recent home.
Low down payment options have spurred many buyers to land their perfect home this year, with 63 percent of recent buyers saying they put less than 20 percent down on their home and 30 percent used a mortgage affordability program to do so.
Around 37 percent of the buyers said they used a mortgage affordability program because of a lower down payment requirement, 21 percent chose the program because it allowed for a higher debt-to-income ratio, and 19 percent cited lower credit score requirements as the reason for choosing these programs.
As far as education from lenders was concerned, the survey revealed that 86 percent of the respondents felt their lenders provided them with enough resources and information on the mortgage process. Sixty-three percent of the respondents said that they closed on their homes within their desired timeframe.
Homebuyers also revealed that the mortgage process and closing procedures were when they needed the most guidance from their lenders, with 34 percent respondents surveyed saying they needed guidance during the mortgage process and 25 percent needing it during the closing procedure. Despite these positive responses, a majority of the consumers still feel that finding a home and the length of the process remain the least favorite elements of their home buying experience.
Nearly 38 percent of the people surveyed said that they were likely to purchase a home in the next 1-3 years and around 32 percent purchased their existing homes in the last two years, the survey revealed. When it came to HELOCs, the survey found that half of past 10 year homebuyers had a HELOC.
When it came to sources for lending, 80 percent of homebuyers considered at least two lenders for their most recent purchase. In person conversations and bank websites were listed as the most prominent sources of bank products/services, the survey found.