What Do Consumers Really Want from the Mortgage Process?

Consumers are getting more comfortable with a digital mortgage process but still want someone to hold their hand and explain things to them when buying a home, according to Ellie Mae’s second annual Borrower Insights Survey.

Ellie Mae surveyed 3,006 U.S. adults who are current homeowners and renters above the age of 18. With a focus on driving a true digital mortgage experience, Ellie Mae was interested in learning about borrower expectations and experiences with online components of the mortgage process. Overall findings showed that borrowers across all generations are expecting digital options to be part of their loan process, but would still like the capability and flexibility of speaking to a lender, when needed.

Survey highlights include:

• The majority (61%) of respondents expected to be able to apply for and complete a mortgage application fully online.
• 17% of current borrower and renter respondents shared that they have applied for a mortgage in the past year; comparatively, of respondents ages 18–24, 50% said they applied for a mortgage in the past year. This demonstrates the continued momentum of the Millennial generation’s purchase power and interest in homeownership.
• 49% of mortgage holders surveyed responded that their last experience with a lender was for a purchase, and 47% responded that their last experience with a lender was for refinancing. Respondents age 44 and under were more likely to say their last experience with a lender was for a purchase, whereas more than 55% of those age 45 and over say their last experience with a lender was for a refinance.
• For renters, when asked what is preventing them from buying a home, 64% of respondents between ages 65 and 70 said they are happy renting, while 56% of respondents ages 25–34 say they haven’t saved enough.
• While it’s true some may not have enough money saved to purchase a home, the survey indicated that there’s opportunity for greater education for consumers around available loan type options and how much is needed for a down payment toward a home. More than 50% of respondents age 45 and over say they believe they need to put down 20% or more to purchase a home, while 50% of 18- to 24-year-old respondents said they needed to put down between 4–19%.
• Regardless of income, most renters agree that the suburbs are the ideal place to settle down. Those renters making $100,000 or more showed a slight preference for suburban areas if they were to buy a home (50% compared to 45% who would prefer a city/urban area). For those making less than $100,000, the gap widened with all groups saying they would be more interested in living in a suburban area.

What This Means to You

According to the survey, preferences for method of communication may vary by generation, but consumers have a strong preference for a combination of in-person interaction with their loan officer, as well as the freedom and time to complete their loan process online at their convenience.

“These trends point to a significant opportunity for more assertive lender communications that build stronger borrower relationships and accelerate the loan process,” the survey concluded. “An increasing number of high-growth lenders have recognized the potential to help reinvent the entire mortgage experience for today’s digitally integrated consumers.”

While there is untapped opportunity for lenders at the front end of the process, the same potential holds true for title and settlement agents closing transactions.

Technology can be used as a catalyst to spend less time on the process and paperwork, allowing title and settlement companies to focus on delivering an efficient and secure closing.

While many define a digital mortgage as one component of the entire process, there is a much larger opportunity to improve the entire experience for homebuyers, as well as all parties involved in the transaction.