High income earners shop for mortgages distinctly different than lower income earners, a new Fannie Mae study found.
Higher income borrowers - those who earn more than $100,000 a year - are more likely to use mortgage calculations to determine how much to borrow in guiding their decisions. They're also more likely to choose a lender based on how competitive the lender is for their business.
On the other hand, lower income borrowers - those who earn less than $50,000 - are more likely to rely on real estate professionals, mortgage lenders, family, and friends for advice and recommendations while shopping for a mortgage. Lower income borrowers report that shopping for a mortgage would be easier if they had a better understanding of loan terms and costs.
Higher income borrowers, meanwhile, said shopping for a mortgage would be easier if they had a better ability to compare multiple loan offers.
Higher income borrowers tend to use online shopping about double the amount than lower income borrowers, according to the Fannie Mae study. But all borrowing groups surveyed said they'd like to increase their use of online shopping tools to aid them when looking for a mortgage, such as comparison tools and product reviews.
"Enhanced online tools, especially given the aspiration to use them much more often in the future, could help consumers of all incomes to become better mortgage shoppers and achieve better outcomes by addressing the issues they think will make the process easier, such as enhancing their understanding of mortgage terms and costs and their ability to make simultaneous comparisons of loan terms from multiple lenders," said researcher Steve Deggendorf, Fannie Mae's director of business strategy.
Thorough mortgage shopping is important because it helps borrowers get lower costs and "fewer surprises at the loan closing table and higher long-term satisfaction with their choices," Deggendorf said.