Although most consumers indicate that they had a positive homebuying experience despite a more time consuming mortgage process, they also called attention to three things that banks need to improve on.
TD Bank's Mortgage Service Index, which polled over 1,300 American homeowners who took out a home mortgage during the last 10 years, found that even with new loan and closing disclosures forms associated with the TILA-RESPA Integrated Disclosure (TRID) rule, homebuyers report positive mortgage experience and are using new, creative ways to finance their home purchases.
Although over half of respondents rated their lender as “excellent” or “very good” in responsiveness, mortgage rate and terms, honesty and transparency, accessibility, and keeping them informed, they also noted that three areas that mortgage banks needed to improve on include:
- Adding more information online.
- Training frontline staff.
- Offering home financing seminars or workshops.
According to the report, nearly all respondents said that their mortgage loan officer was their most valuable resource during the home-buying process than in 2015.
Sixty-seven percent of millennials suggested that banks could improve their mortgage process by educating them and adding more online information and resources. The report showed that 62 percent of respondents spent close to $2,000 in unexpected costs during the mortgage process, while almost half of millennials incurred up to $5,000 in unexpected costs.
"Our data demonstrates that home buying sentiment is improving, but lenders still need to adopt a more omnichannel approach to providing financial guidance and expertise," said Kevin Gillen, SVP of Mortgage at TD Bank. "Consumers should find a lender who can educate and support them on all aspects of the mortgage process. By understanding the process they will enjoy a more positive home-buying experience."
Although homebuying sentiment is on the rise, stress factors remain an issue, according to TD Bank. Of those surveyed, 71 percent of homeowners rated their most recent buying experience as "very good" or "excellent," up almost 10 percent in the past two years, despite a more time consuming mortgage process. The most positive aspects of the mortgage process for respondents was getting approved for a mortgage, finding a good realtor, and finding the right lender.
Housing market improvements over the next six months are expected by 42 percent of Americans, while 56 percent felt it’s a "good" time to buy a home. The survey found that one in five consumers were "extremely likely" to purchase a new home in the next year, including 38 percent of millennials.
TD Bank reported that 34 percent of Americans had an "excellent" experience with their lender, up from 28 percent in 2015. However, 32 percent of respondents reported their home purchase was "very to extremely stressful."
"With today's increasing home prices and the anticipated rise in interest rates, choosing a first-time mortgage or affordability program can be a great way for consumers to enter the housing market," Gillen explained. "TD Bank continues to make financing more manageable by offering flexible loan options to buyers at all income levels. Buyers embarking on homeownership should understand that finding a lender that provides ongoing communication and diverse loan options is critical to a smooth, low-stress home purchase."
Click here to view the full survey.