Getting through the home mortgage approval process is a lot trickier than it once was, and it turns out a large number of homebuyers who successfully make it end up with a case of buyer's remorse.
They don't regret the home purchase so much as the selection of the mortgage to pay for it.
That's the chief takeaway from the J.D. Power 2016 U.S. Primary Mortgage Origination Satisfaction Study, which found 21% of customers who bought a home regret their choice of lender, and 27% of first-time home buyers regret their choice.
There appear to be two reasons. For many consumers, the regret stems from a poor experience with the lender. This can be caused by more problems than expected, broken promises, and poor communication.
Felt lender pressure
The second reason for dissatisfaction has to do with price. Even though they got multiple quotes and appeared to do their homework, this group of new homeowners regrets picking their lender. Of the largest complaints, 72% of those regretting their lender choice said they felt pressured to pick a particular mortgage product that, in hindsight, was not a good fit.
They said in many cases they went with a particular lender because it had the lowest rates, or they had done business with it in the past.
“This ‘happy buyer’s remorse’ is in part due to customers feeling that circumstances out of their control drove them to a particular choice and that options weren’t totally clear,” said Craig Martin, director of the mortgage practice at J.D. Power.
Had to jump through hoops
The problem, says Martin, is many of these consumers are happy with their interest rate, but feel like they had to jump through a long series of hoops to finally get the loan approved. In the end, these consumers might not fully understand exactly what they got. What lenders have to worry about, he says, is these consumers may be happy when they sign the loan papers, but not later on.
Lenders, of course, are under new pressure since the financial crisis, having to implement tougher underwriting requirements. These requirements have had the effect of prolonging the process, no doubt creating negative feelings along the way.
Quicken Loans ranked highest
The J.D. Power survey found Quicken Loans ranked highest in customer satisfaction in the loan approval process. It's followed by CitiMortgage and Ditech Financial.
The report's authors say consumers can improve their chances of being happy with their loan by selecting a lender and a mortgage product before they decide on a home. The researchers found consumers who did that were significantly more satisfied with the result.