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Buyers Don’t Read the Mortgage Paperwork

More than 75% of buyers surveyed said they didn’t fully understand their mortgage terms before closing – and 30% didn’t read it completely before signing.

NEW YORK – The homebuying process can be complex – especially if you don’t read the documentation along the way.

The paperwork may be too cumbersome for some of them, according to a survey of nearly 1,000 recent homebuyers conducted by Porch.com, a home remodeling website. More than three in four said they didn’t completely understand the terms of their mortgage – and 30% admitted that they only read “some” or “none” of their mortgage docs and now regret it.

More than half (57%) also said they relied on family for mortgage advice rather than a lender or financial planner.

But it’s not just the mortgage docs. Many of the people surveyed have similar regrets about not researching their home insurance policy. Nearly 37% read “none” or “only some” of their homeowners insurance policy before signing it. The same percentage also said they don’t completely understand what their homeowners insurance policy covers.

In many cases, homebuyers rely on others to double-check items for them throughout the process: 61% said they usually asked another person to read over their important home policies before they signed them.

But buyers’ lack of due diligence over the fine print and their decision to rely on others may be making them less confident. First-time home buyers are more than three times as likely as previous homeowners to say they feel unprepared to buy a home, according the survey.

“Whether you’ve bought 10 homes or zero, research, not experience, is crucial for home buying,” the study concludes. “Regrets and expensive financial mistakes were not often due to inexperience, but instead not taking the time to consult experts or research better options.”

Source: “Where Did You Find It?” Porch.com (2020)

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