TORONTO, ONTARIO--(Marketwired - Apr 28, 2014) - BMO Bank of Montreal has released a report on the psychology of first-time home buyers getting pre-approved for a mortgage.
The report shows that for first-time home buyers that were pre-approved for a mortgage, an overwhelming number of respondents (94 per cent) say they found themselves to be in a much better position to start looking for a home, and had a good sense of what they could afford.
The poll also revealed that the majority of Canadians (92 per cent) currently looking to buy their first home plan to get pre-approved.
"Seven out of ten first-time home buyers say when they walk into a home, they know right away if it's the right house for them," said Laura Parsons, Mortgage Expert, BMO Bank of Montreal. "Being pre-approved for a mortgage and knowing you have a mortgage with a guaranteed interest rate for a certain period of time while you are looking could mean the difference between landing your dream home, and settling for second best."
The psychology report also showed the following for those that had gone through the pre-approval process:
- 59 per cent feel the pre-approval process was stressful
- Almost half (48 per cent) were worried they wouldn't be pre-approved
- However, after going through the preapproval process, more than 87 per cent of respondents said it was simple; and
- Three-quarters (79 per cent) said it gave them the freedom to look at homes without having to worry about financing
"We want to provide advice to first-time home buyers well in advance of their purchase in order to guide them to their potential, reduce outside debt and get used to the costs of owning a home with a down payment savings plan," said Ms. Parsons. "Thinking about the pre-approval process often brings out feelings of stress, often because of a misunderstanding of the process. With the right support and guidance from a financial advisor, stress can be significantly reduced and buyers are free to focus on choosing their perfect house."
The average first-time home buyer's price range is $316,100. Price competition is heating up; one third of first-time buyers (35 per cent) are willing to enter a bidding war, and six in ten first-time buyers (57 per cent) feel it is impossible to find a home they want within their price range - adding to the pressure of securing the right home.
BMO offers a number of products and services that can help first-time home buyers make a responsible home buying decision. For example, the BMO Home Buyers Guide provides advice and information designed to guide buyers through the process of financing, choosing and purchasing a new home. For more information, visit www.bmo.com/homebuyersguide.
The BMO First Time Home Buyers Report was conducted by Pollara. Survey results cited in this report are from online interviews with a random sample of 513 First Time Canadians Home Buyers 18 years of age and over, conducted between January 24th and March 6th, 2014. As a guideline, a probability sample of this size would yield results accurate to ± 4.3 per cent, 19 times out of 20. Data has been weighted by region, gender, and age, based on the most recent Census figures, so that it is representative of all adult Canadians.
About BMO Financial Group
Established in 1817 as Bank of Montreal, BMO Financial Group is a highly diversified financial services organization based in North America. The bank offers a broad range of retail banking, wealth management and investment banking products and services to more than 12 million customers. BMO Financial Group had total assets of $593 billion and more than 45,500 employees at January 31, 2014.