Hispanics are more likely to buy a home in the next year compared to the general population, but they generally feel the home lending experience falls short. Those are among the findings from the Mortgage Service Index, a nationwide consumer survey commissioned by TD Bank.
The study looked at the Hispanic home buying experience, attitudes toward obtaining a mortgage, and Hispanic home owner’s outlook on the housing market. The Mortgage Service Index, which encompassed more than 1,500 consumers who purchased homes within the last 10 years, was designed to assess opportunities and challenges during the home buying process, with a specific emphasis on the home financing process.
The Index found that Hispanic home buyers had a less satisfying buying experience than the general population. 43% of Hispanics say they had an “extremely” or “very stressful” experience when buying their last home, while only 24% of the general population felt the same stress levels during the home buying experience. In fact, nearly one quarter (23%) of Hispanics said the mortgage process prevented them from closing on time compared to 12% of respondents overall.
The Mortgage Service Index revealed that just over half of Hispanics (54%) found the process of getting approved for a mortgage to be “excellent” or “very good,” while 67% of the general population rated getting approved for a mortgage the same. Additionally, more Hispanics turn to bank/lender websites (39%) as a source of information than the general population (34%).
The highest percentage of Hispanics (40%) said it took three to seven days for preliminary approval followed by 21% who received approval in one to two days and 17% who received approval in two weeks. Over one quarter of Hispanics (26%) said the length of the mortgage process from application to approval took three to four weeks while 23% said it took one to two months.
Despite more stressful home purchasing experiences, Hispanics have an optimistic outlook on home buying as indicated by the Index. It revealed that nearly one third (32%) of Hispanics are extremely or very likely to buy a home in the next year as compared to 18% of the general population. In fact, more than three quarters (80%) of Hispanics feel it is a good time to buy a new home.
Michael Copley, EVP/Retail Lending at TD Bank, said the survey results suggest Hispanics are eager to purchase a new home, but in order to reduce stress in the process and feel satisfied with the home buying experience, they will need resources that can increase communication and education throughout the process.
Personal Mortgage Process Differs
The in-person experience is very important to Hispanics. Nearly three quarters (70%) of Hispanics said they applied for their mortgage in person compared to the general population (65%). In addition, the study also found that only 16% of Hispanics have applied for their mortgage over the phone compared to the general population (21%). Interestingly, 14% of Hispanics applied for their mortgage online, while only 12% of the general population did so.
Regarding where they obtained their mortgage, more Hispanics used a bank/financial institution where they didn’t have an existing account (43%) compared to those who obtained a mortgage with their primary bank/financial institution (38%).
Expectations Met But Still Room For Improvement
In terms of the overall home buying process, the majority of Hispanics rated their lender as “excellent” or “very good” in the following aspects of interaction with their lender:
- Honesty and transparency (60%)
- Simplicity in obtaining a mortgage (56%)
- Helping them understand the entire mortgage process (54%)
- Explaining the mortgage and options available (52%)
- Providing easy to use online tools (51%)
The Mortgage Service Index found that these factors contribute highly to a buyer’s perception of the overall home purchasing process.
The Mortgage Service Index also revealed several areas where improvements can be made to help increase Hispanic buyers’ overall satisfaction with the mortgage lending experience. These included accessibility, responsiveness, and clarity in the home buying process. 57% of Hispanics found their lender accessible, and 53% found them responsive vs. 62% of the general population and 61% respectively. 53% of Hispanics believed their lender kept them informed throughout the process compared to 59% of the general population. 51% felt their lender had provided them with a greater sense of confidence throughout the process vs. 57% of the general population.
While over 62% of Hispanics weren’t surprised by the mortgage rate they ultimately ended up with, nearly one quarter (24%) said it was higher than they originally anticipated compared to 18% of the general population.
“The TD Bank Mortgage Service Index demonstrates that Hispanic home buyers expect their mortgage partner to be honest, accessible and straightforward throughout the home buying process,” Copley said.