How Much Do Buyers Really Know About the Buying Process?

Friends and family are most consumers’ go-to for information on real estate.

Fifty-eight percent rely on real estate experts and 47% seek information online, according to a recent MoneyWise report. And the information people are getting isn’t all that accurate. Nearly 40% of consumers in the survey couldn’t correctly define closing costs, 42% couldn’t define annual percentage rate as well as mortgage and 46% didn’t know what appreciation was. Close to half (48%) couldn’t correctly define down payment or offer and half couldn’t define interest. A whopping 62% could not define mortgage rate.

Pennsylvania Association of Realtors® President Christopher Beadling said, “This study shows what an important role we as Realtors® have in explaining the homebuying process to our clients. Most consumers purchase a home just a few times in their lives and really look to us to help guide them through the entire process from the start to the close.”

For those who don’t currently own, they said they plan to have about $40,000 saved before making a down payment, while those who already own said they had around $66,000 saved before making a down payment on their first home. The majority of current homeowners (78%) said they put down 20% or more on their first home, while the majority of non-owners (62%) said they plan to put down between 1% and 12%.

For current homeowners, they said their biggest regrets about their mortgages were having an adjustable-rate mortgage (78%), followed by having a government-issued loan (71%) and having a jumbo loan (70%). More than 60% regretted a conventional loan and 55% regretted a fixed-rate mortgage. As for loan times, only 27% of those with a 30-year loan regret it, compared to 71% of those with a 15-year loan.

More than half of homebuyers (55%) said they rushed their decision to buy a house due to perceived market pressure, with the highest percentage coming from those who purchased from 2018 to present.