IRVINE, CA—Nearly half (49%, to be exact) of today’s potential homebuyers say they are not pursuing the financing they need to buy a home out of fear that they won’t qualify for a mortgage, according to a national consumer survey from loanDepot, a private, independent retail home-loan lender. The firm reports that while strong pent-up demand to buy a home exists among a broad national cross-section of the population, very few prospective buyers have actually taken any steps to see if they’ll qualify for a home loan.
Ironically, for many buyers, this fear is unfounded. According to Dave Norris, president and COO of loanDepot, “While market and regulatory conditions have made it harder for many borrowers to secure a loan, consumer lending is beginning to loosen up for mortgage borrowers, including those with less-than-perfect credit. Potential buyers are forfeiting their drams of homeownership before they find out what financing options are available to them. It’s never been easier than it is today to go online and research your options. They may be better than most people think.”
Despite the strength of the apartment market, the desire to own a home in this country is still quite strong. The firm reports that one in three Americans say they’d like to buy a home in the next two years, and 42% of all Americans don’t own a home today. One in five who already own a home say they’d like to buy another home in the next 24 months—either a new primary residence, investment home, retirement home or vacation home. In February, second homes accounted for 20% of all home sales.
Also, 56% of all buyers who don’t a home today, but want to, say they’re not pursuing it because they fear they won’t qualify for a loan, says loanDepot. The same is true for 30% of those who already own a home and want to buy another in the next two years.
While 71% of all Americans who want to buy a home in the next two years will need financing, 89% haven’t actually taken any steps to see if they could get a home loan, according to loanDepot. Specifically 74% of people who want to buy a home but fear they won’t qualify for a mortgage admit they haven’t taken any steps to qualify. Only 27% have actually taken steps to see if they can qualify.
Fear of rejection may be one reason why home sales have been declining nationally. As GlobeSt.com reported in March, US home sales volume decreased in February for the fourth consecutive month as distressed sales continued to dry up and institutional investors pulled back, according to RealtyTrac. The firm reports that US residential properties, including single-family homes, condominiums and townhomes, sold at an estimated annual pace of 5,083,241 in February, a 0.2% decrease from the previous month, but still up 7% from a year ago.