It seems the mortgage industry has some work to do to help first-time buyers better understand the home buying process.
A survey of mortgage professionals by mortgage insurer Genworth found that 39% believe that growth of first-time buyer demand is being restricted by consumers’ lack of knowledge.
One of the key misconceptions regards down payments.
Many of the mortgage professionals polled at the 2017 Mortgage Bankers Association Secondary Market Conference recently held in New York City, said that consumers either believe that they must have a 20% downpayment, or that it would difficult to get a home with less.
“While first-time homebuyers continue to drive the purchase market, we believe many are staying on the sidelines due to the misconception that a 20 percent down payment is required to secure a mortgage,” said Rohit Gupta, CEO of Genworth Mortgage Insurance.
Other findings of Genworth’s survey include a 93% awareness of the need for better technology platforms for originating mortgages. Outdated systems needing overhauls, a lack of understanding for integration, and cost are the main things holding the industry back, the poll found.
There was also a feeling that credit quality has improved although half of the mortgage professionals polled said that underwriting standards are too high while 43% said they were appropriate for the market and 75% said they are too low.
Respondents generally agreed that front-end credit risk transfer with deeper mortgage insurance would have a positive impact on the mortgage industry and lower risk for the taxpayer while not increasing borrowers’ costs.
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