Fannie Mae study reveals challenges and knowledge gaps in the mortgage process
While consumers highly value homeownership, they face significant challenges in understanding and navigating the mortgage process, according to the findings of a recent Fannie Mae survey.
The 2023 Mortgage Understanding Study, which surveyed over 3,000 US adults, highlighted a persistent knowledge gap about mortgage qualifications and a lack of confidence in the mortgage process.
The study found that only 19% of respondents believe it’s a good time to purchase a home, a dramatic 43-percentage-point decline from 2018. High mortgage rates were cited as the primary reason for this pessimism.
Despite this, homeownership remains a priority for most, with 92% of consumers stating it’s important to them and 74% planning to buy on their next move.
However, misconceptions about mortgage requirements remain widespread. The survey revealed that 32% of respondents either don’t know or significantly overestimate the minimum credit score required for a typical mortgage. Approximately 90% overstate or are unaware of the minimum down payment required.
These knowledge gaps may contribute to the low confidence levels among consumers regarding the mortgage process, Fannie Mae said in the study.
Only 45% of respondents reported feeling confident about navigating the mortgage process, a figure unchanged since 2018. Younger, less educated, and lower-income individuals expressed even lower confidence levels.
On a positive note, consumer awareness of credit scores has improved. The percentage of consumers who have seen their credit score increased from 87% in 2018 to 93% in 2023. Additionally, the use of credit monitoring services has grown significantly, from 25% in 2018 to 40% in 2023.
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The study also highlighted a lack of awareness about available resources. Only 32% of respondents are familiar with low down-payment programs, though this represents an increase from 23% in 2018. Similarly, only 40% are aware of counseling services to assist with the mortgage process.
“While consumer knowledge of what it takes to qualify for a mortgage is mixed, Fannie Mae and the industry can help close the knowledge gap by making the mortgage process more intuitive and leverage underwriting innovations to make the dream of homeownership a reality,” the report stated.
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