Prospective Homebuyers Favor Low Down Payments, Fixed Rates

A plurality of prospective homebuyers responding to an industry survey anticipate down payments of less than 15 percent when they purchase a new home. Forty-four percent of respondents anticipate low down payments of no more than 15 percent, while 34 percent foresee paying between 15 and 24 percent of purchase price at closing.

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Nineteen percent say they will put down more than 25 percent of their home purchase price when the purchase their next home, according to the survey conducted this May by Research Data Technology on behalf of Charlotte, North Carolina-based ""LendingTree."":https://www.lendingtree.com/

Data was collected from 600 people planning to purchase a new home sometime in the next year. About 57 percent or respondents will be first-time homebuyers.

When it comes to the type of mortgage prospective homebuyers prefer, the plurality--45 percent--favors a 30-year, fixed-rate mortgage loan.

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The 15-year, fixed-rate mortgage was the second-most popular choice with 36 percent of respondents expecting to obtain this type of loan.

Seven percent plan to apply for an adjustable-rate loan.

The greatest frustrations with the mortgage process include time-consuming paperwork, complex loan terms, and the borrower's own uncertainty about whether he/she is receiving a fair deal.

At the same time, the greatest obstacles to obtaining a mortgage and purchasing a home are prospective buyers' financial situations and ability to obtain sufficient funds for a down payment, according to LendingTree's survey.

A majority of survey respondents anticipate rising home prices and rising interest rates over the next 12 months, meaning time is of the essence for those planning to purchase a home.

Sixty-four percent of prospective homebuyers believe interest rates will rise in the next 12 months, and 68 percent believe home prices will rise over the same time period.

""Increasing home prices are providing would-be sellers with the confidence needed to take action, while rising interest rates are placing a sense of urgency on potential home buyers,"" said Doug Lebda, founder and CEO of LendingTree.

""Together this creates a unique window of opportunity for buyers and sellers to take advantage of the market while home prices and rates are still reasonably affordable,"" Lebda said.