To understand how strongly consumers feel about
the issue of choice versus a one-size-fits-all mortgage, Countrywide commissioned a national survey of more than 2,280 homeowners.
The results show that the majority of respondents (76%) strongly agreed that they wanted to be informed by mortgage lenders
about as many closing cost choices as possible in order to arrive at a decision best suited to their individual circumstances.
Other findings include:
* When U.S. homeowners were asked their level of agreement with the notion that the way in which closing costs
are paid should be tailored to the individual based on the borrower’s unique set of circumstances: 87 percent strongly
agreed or somewhat agreed.
* Nine out of 10 U.S. homeowners agree that there is really no such thing as
a mortgage without fees.
* Three of five U.S. homeowners (61%) indicated strong agreement with the idea
that “one size fits all” mortgages aren’t necessarily the best option for everyone.
“People clearly understand that there will be costs when they finance a home,” said Dan Hanson, managing director
of Countrywide. “Home buyers look to us for information, so we’ve decided to recommit ourselves to educating
people about the cost options that work best for their unique situations. By presenting our customers with a menu of
options, they can make an informed choice that’s right for them now and into the future. And, the best choice
in the long run isn’t necessarily the one with the least out-of-pocket costs, but rather the one that brings the best
total value over the life of the loan.”
According to Hanson, one size most definitely doesn't
fit all. The right home loan choice can be radically different from one buyer to the next. For example, a young
couple with a growing family has tremendously different financial circumstances than a couple buying a home for retirement.
As part of the It’s Your Choice campaign, Countrywide will advise customers about their mortgage cost options, including
choices such as:
* No money needed for closing costs
A mortgage lender can pay your closing
costs. In this scenario, the lender does not require cash from the borrower to pay fees at the closing table.
Instead, the home buyer obtains a loan with a slightly higher interest rate. It can be a smart move for buyers who have
little money set aside or who plan to be in a home for a short time because their savings in closing costs can often more
than offset their increased interest expense.
* Reap the rewards of lower interest when
you pay closing costs upfront
Buyers who pay loan costs at closing are rewarded with a lower interest rate
on their mortgage. A customer who is planning on staying in their home for more than a few years may see the benefit of selecting
to pay the costs at closing and having a lower interest rate to help them save over the long term.
*
Minimize your mortgage interest rate
Some homeowners may benefit from paying loan discount points to lower their
interest rate. By paying loan discount points, buyers can “buy down” their mortgage interest rate, a particularly
attractive option if the buyer intends to retain the mortgage for more than five years.
*
Mix it up
A combination of a first mortgage and a second mortgage is yet another choice. This option allows
many homeowners to avoid private mortgage insurance and enables them to pay down the second mortgage separately. If
the second mortgage is a home equity line of credit, borrowers may reuse the available credit in their line as they pay it
down.
* No monthly mortgage insurance payments
In most instances, private mortgage
insurance is required when a borrower is unable to make a down payment of 20 percent or more. There are different types of
mortgage insurance available to borrowers. A borrower may accept a slightly higher interest rate or pay additional points
at closing to avoid paying monthly premiums. All of these options may have some tax advantages, so borrowers are encouraged
to consult their tax advisor to learn if they qualify for a tax deduction and the different rules that apply to purchase and
refinance transactions.
These are just a few of the many scenarios that can suit a homebuyer’s
very unique situation. “Some of these options can be combined to make the final result a thoroughly customized
solution, a far cry from the one-size-fits-all approach,” said Hanson.
As
with any financial decision, home buyers and owners should carefully evaluate their options and fully understand the advantages
and disadvantages before making a choice.
“Our new It’s Your Choice initiative
further distinguishes Countrywide when it comes to home loans,” said Hanson. “People know they have choices,
so our job is to make sure we put them all on the table and share our 37 years of home loan expertise with the customers who
trust us every day.”
# # #
About the
Survey Methodology
This survey was conducted online by Harris Interactive on behalf of Countrywide Home
Loans among 3,435 adults (aged 18 years and older) within the United States between June 13 and 15, 2007, among whom 2,280
were homeowners. Figures for region, age within gender, education, household income and race/ethnicity were weighted where
necessary to bring them into line with their actual proportions in the population. Propensity score weighting was also used
to adjust for respondents’ propensity to be online.
With a pure probability sample of 3,435
one could say with a ninety-five percent probability that the overall results have a sampling error of +/- 3 percentage points.
Sampling error for subsamples is higher and varies. However that does not take other sources of error into account. This online
survey is not based on a probability sample and therefore no theoretical sampling error can be calculated.
About Countrywide
Countrywide Home Loans, Inc., a member of the Countrywide®
family - America's #1 home loan lender – (as ranked for 2006 by Inside Mortgage Finance, Feb. 2, 2007, Copyright 2007),
originates, purchases, securitizes, sells and services home loans and is the primary subsidiary of Countrywide Financial Corporation
(NYSE: CFC). Countrywide Financial Corporation, through its subsidiaries, provides mortgage banking and diversified financial
services in domestic and international markets. Founded in 1969 and a member of the S&P 500 and Fortune 500, Countrywide
Financial Corporation is headquartered in Calabasas, California and its family of companies has a workforce of more than 50,000
in over 900 offices across the country. http://www.countrywide.com
About Harris Interactive
Harris Interactive is the 12th largest and
fastest-growing market research firm in the world. The company provides innovative research, insights and strategic advice
to help its clients make more confident decisions which lead to measurable and enduring improvements in performance. Harris
Interactive is widely known for The Harris Poll, one of the longest running, independent opinion polls and for pioneering
online market research methods. The company has built what it believes to be the world’s largest panel of survey respondents,
the Harris Poll Online. Harris Interactive serves clients worldwide through its United States, Europe and Asia offices, its
wholly-owned subsidiaries Novatris in France and MediaTransfer AG in Germany, and through a global network of independent
market research firms. More information about Harris Interactive may be obtained at www.harrisinteractive.com.
To become a member of the Harris Poll Online and be invited to participate
in online surveys, register at www.harrispollonline.com.
