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Many consumers chronically mystified by mortgage maze

by Broderick Perkins

(2/11/2011) Erate Exclusive - Consumers applying for a home loan ache over limited access to affordable mortgages, they get turned around by dizzying demands for documentation and are baffled by technical mortgage-babble.

Applying for a mortgage once took little more than completing an application and signing on the dotted line, but financing a home today ain't what it used to be.

For many Americans, the home loan application process is more stressful than getting a job.

Worst of all?

That isn't new news.

Years after the housing market tanked and sank the economy, more than 70 percent of Americans say getting a mortgage today is a serious national problem, according to a new study by MortgageMatch.com, a home loan and information site operated by Move, Inc. which also operates Realtor.com and other major online real estate portals.

Understanding the brutal mortgage process and bowing to lenders' requirements were considered the most arduous tasks faced while running the gauntlet to a mortgage.

More than 32 percent of survey respondents ranked the application process more challenging than getting the mortgage itself (23 percent) or negotiating the sale price on the home (25.3 percent).

For more than three out of four (79 percent), getting a mortgage was as difficult as or more difficult than they had imagined.

Mortgage application stress

And then there's that gnawing psychological pain.

More than one in five recent home buyers (20.9 percent) said waiting to hear if they were approved for a mortgage was more stressful than waiting to hear if they got a job.

Because document requirements from their lender kept changing, nearly one-quarter (22.9 percent) said applying for a mortgage was challenging. Also, 9.1 percent said their lender asked for seemingly inappropriate information. Almost twice as many female buyers (11.7 percent) as male buyers (6.4 percent) said they were asked for what they considered inappropriate information.

Technical jargon was too much for 21.6 percent of those surveyed; 20.7 percent said finding a lender that was easy to work with was a challenge. Those problems were more challenging than the amount of time it took to fund a loan (19.1 percent) or problems experienced in qualifying due to their credit rating (6.9 percent).

Unfortunately, mortgage maze confusion is chronic.

Both produced almost a half decade ago, the AFL-CIO-commissioned "Homeowners Confused, Worried About ARMs (adjustable rate mortgages)" and BankRate.com's "Mortgage Ignorance Rampant," reveal how American's have had a loathe affair with mortgages for years.

"Over the past few years, a lot of buyers have had a hard time not only getting a loan but getting through the process," said Sue Stewart, senior vice president at Move, Inc., operator of MortgageMatch.com.

"This survey is a wakeup call and clearly points to the fact that borrowers want a process that's easy to understand and follow. They don't want surprises and they want to be able to depend on their mortgage lender. For most people, the home buying process isn't about the mortgage — it's about getting a home," Stewart said.

The survey is based on interviews conducted January 7 through 9 and January 14 through 16, 2011 from two samples of 1,000 interviews each, and was conducted by GfK Custom Research North America. Interviews included approximately equal numbers of male and female adults.

More first-time buyers

The survey revealed first-time buyers will continue to play an important role in the housing market over the next 36 months.

Nearly three out of five (58.4 percent) of Americans planning to purchase a home in the next three years identified themselves as first-time buyers. The current market share is 33 percent, a twenty-one (21 percent) increase from a Move, Inc., survey taken in October, 2009.

However, first-time home buyers are significantly more concerned than other buyers about the problems they face in getting a mortgage today by almost 13 percent.

Nearly 26 percent of first-time buyers said waiting to get word about their mortgage approval would be more emotionally trying than waiting to hear if they landed a job.

"First-time buyers are critical to the recovery of our real estate economy and the future of homeownership," Stewart said.

In spite of frustrations and confusion, many recent buyers who participated in the MortgageMatch.com survey said they successfully secured loans and purchased homes in the past three years.

That's because most were highly qualified with a majority, 54.6 percent reporting they had FICO scores exceeding 700. Also, more than two-thirds (67.7 percent) of the survey respondents that successfully took out a mortgage said they were able to put down less than 20 percent of the purchase price.

Unfortunately, 10.8 percent reported their lender gave them a higher interest rate than what they were originally quoted.

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