Income Shapes Approach to Mortgage Shopping
High-income borrowers obviously have financial advantages when it comes to seeking a mortgage. But they're also more likely to pursue strategies that help them find the best deal, strategies their fellow borrowers might do well to adopt.
Newly released results of a survey by Fannie Mae found there are distinct differences in how borrowers with incomes of $100,000 or more go about shopping for a mortgage, compared to those with lower incomes.
Higher-income borrowers trust own judgment
The study found that higher income borrowers were more likely to rely on their own calculations and to use online tools like a mortgage income calculator when comparing loan offers and determining how much they could afford to borrow. They also tended to choose a lender based on the competitiveness of the mortgage terms offered.
On the other hand, lower income mortgage borrowers, defined as those with incomes of less than $50,000 a year, were more likely to rely on the advice of others - a real estate agent, mortgage professional, friends or family - in not only choosing a lender, but also in deciding how much they could afford to borrow.
Lower income borrowers would prefer simpler terms
Asked what would have made the process of shopping for a mortgage easier for them, higher income borrowers were more likely to request the ability to obtain and compare mortgage offers from multiple lenders all at once, while lower incomes borrowers tended to say they would have liked easier-to-understand loan terms and costs.
More than twice as many high-income mortgage borrowers said they had used online tools to obtain a mortgage quote, calculate how much they could spend on rent or a mortgage, or look for a mortgage lender, compared to their lower-income counterparts. They were also significantly more likely to do those things than their middle-income counterparts as well.
Smart phones, social media little used
Borrowers across the board were much more likely to use personal computers, such as laptop or desktop models, to shop for mortgages or use personal finance tools than they were to use more recent technology such as smart phones or tablets.
Most also said that social media played only a small role in mortgage shopping for them, and that they do not expect it to play a much larger role in the future.