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STUDY: Home buyers are confused about the mortgage process and worried that bias is impacting their outcomes

Written by:  

Patrick Boyaggi

Patrick Boyaggi

Patrick Boyaggi

CEO an Co-Founder

Patrick is the Co-Founder and CEO of Own Up. He has a wealth of experience and knowledge as a mortgage executive.

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Home buyer mortgage shopping 2022

The internet has made it easier to explore all available purchasing options in one place on our own terms, from flights to cars. But when it comes to home financing, the same approach to browsing, comparing and shopping is more of a mystery than an expectation.

The mortgage industry is intentionally difficult to navigate, rife with bias and inequities that have the potential to cost homebuyers thousands of dollars over the life of their loans. As the housing market continues to be one of the toughest markets in a generation, it’s critical that home financing be tipped in the favor of home buyers.

To get a pulse on how consumers feel about the current housing market, we conducted a survey of 1,000 homeowners and potential buyers in the U.S. What we found is that many Americans are ill-equipped to navigate the mortgage process and that factors such as race, gender, and age play a significant role in the financial outcomes for buyers.

The mortgage process is difficult to navigate.

Before making a large financial transaction, people like to do their own research. We compare what we’ll get against how much it’ll cost and make decisions based on what matters most to us. But when it comes to the largest financial decision many of us make in our lifetimes, home financing, this step often gets skipped.

In this survey, we found that one in three respondents (31%) did not shop around for their mortgage - a statistic that hasn’t changed since 2018. And although Fannie Mae found borrowers have the potential to save an average of $1,500 by getting one additional rate quote and an average of about $3,000 for five quotes, only 4% of respondents received more than three loan offers.

So why aren’t people shopping around? To start, many find it difficult. More than two-thirds (78%) of people found the process of shopping around to be moderately (45%) to very challenging (32%).

And beyond shopping around, the mortgage process still proves difficult. Once consumers chose a lender, 27% still found it very challenging to secure home financing and 41% of respondents found it moderately challenging. When asked to compare the level of difficulty to other life tasks, roughly one-third of respondents felt securing home financing was significantly more difficult.

Respondents believe securing a mortgage is significantly more difficult than:

Purchasing a carApplying to collegeApplying for a jobToilet training a child

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There is a general lack of knowledge about home financing.

Mortgages are a complicated topic with no one-size-fits-all answer. It’s difficult to understand the space, let alone determine what the right course of action is based on your unique financial picture.

And consumers struggle at every point in the process. When asked about APR - one of the most important considerations in a loan offer - over half (51%) of respondents said they were familiar with the term but don’t know how to use it to evaluate offers and almost a third (31%) in the early phases of home financing were not aware they could comparison shop for a mortgage.

More often than not, consumers learn about the process as they go through it, often too late to impact their outcome. We asked what the one thing homebuyers wished they’d known sooner in the mortgage process and 26% wish they’d known their credit score would impact the rates they were eligible for, while 24% of respondents wished they’d known that a pre-approval letter could impact their offer. Both of these are factors that make consumers more competitive but only before or at the beginning of the process.

This misalignment of both industry information and interests can play a massive role in the financial outcome of a buyer. Over half (54%) of people said they relied on their mortgage lender above their realtor, friends and family, online publications or government websites. Because lenders make more money when a borrower closes with a higher interest rate or pays more in fees, there’s a misalignment of incentives that is unfavorable to the homebuyer.

Mortgage lenders like it this way – the less the homebuyer understands, the more they can charge.

Where you receive information can impact your overall outcome

Because a mortgage lender plays such a crucial role in the overall outcome of the home loan, from financing to providing advice, it’s crucial to understand how consumers are being connected to them.

While a majority of people receive a referral from a realtor (29%) or friends and family (19%), consumers were more likely (36%) to find their mortgage lender through their own research. And although the internet makes it easier to find and compare lenders, it also gives those lenders space to misrepresent the outcome they can offer through misleading advertising.

During their search for home financing, nearly three out of four (74%) respondents said they saw advertisements for mortgage lenders. Those advertisements influenced one-third (32%) of our respondents to contact that lender, with minority groups being 10% more likely to be influenced by an advertisement.

While advertisements are not inherently dangerous, one out of three respondents (35%) received a higher rate than what was advertised.

Those who received higher rates than advertised vary by age, race and marital status.

43% vs. 17%46% vs. 31%42% vs. 32%
Under 44 vs. Over 60Single vs. MarriedBlack vs. White

It’s important to note that 19% of Black Americans found their mortgage lender through ads compared to just 9% of white Americans.

Non-financial factors play a role in outcomes

Countless studies have shown that bias plays a role in the financial outcomes of mortgage applicants. But even before homebuyers reach a lender, an applicant’s background can play a role in how they approach the process.

For example, levels of confidence navigating the mortgage process fluctuates based on socio-economic groups. Of the 31% of respondents who felt they knew everything going in, around half (49%) were over the age of sixty, compared to just 18% of those under forty-four. White Americans were also more confident in their knowledge, with 37% saying they felt they knew everything going into the process compared to just 20% of Hispanic Americans and 23% of Black Americans.

Once a homebuyer does secure a loan, it’s clear that background still plays a role in their perception of the process. One-third (30%) said they believe that their race, gender, or socioeconomic background impacted their financing outcome.

Believes race, gender or socioeconomic background impacted their financial outcome

45% vs. 22%41% vs. 14%37% vs. 31%
Black Americans vs. White Americans18-29 year olds vs. those over 60of single vs. married

And the data backs this sentiment up. According to 2020 data from the Home Mortgage Disclosure Act, lenders deny mortgages for Black applicants at a rate 80% higher than that of white applicants.

Consumers don’t realize they’re overpaying for their mortgage

Despite the challenges to secure home financing when asked about the outcome of their home loan, most homeowners are satisfied with the loan they received. In fact, three in four respondents (77%) felt they received a good deal on their mortgage. But how true is that sentiment?

Using data from Optimal Blue, the leading provider of secondary marketing automation and mortgage services, Own Up monitors the average interest rate spread using their rate range finder tool and continually finds a significant delta between interest rates offered, even to borrowers with the same financial background and credit score. For example, the spread between the highest and lowest rates on March 10th was about 1.125%. On an average loan size of $400,000 thousand dollars, that equates to a difference of $95,881.

So why do most Americans feel they received the best deal?

In reality, they’re likely experiencing confirmation bias - the tendency to interpret information in a way that confirms or supports prior beliefs or values. People don’t like to admit a lack of understanding and, with a lot of money at stake, they want to believe they got it right. And lenders benefit from this perception, making more money the more a consumer pays.

Because of those dueling realities, this massive consumer finance problem has largely gone overlooked. As one of the largest financial purchases most Americans made in their lifetime, it’s crucial that the industry be tipped in favor of the consumer.

At Own Up, we’re on a mission to level the playing field, starting with a more transparent and anonymous experience from start to finish. Our technology allows a home buyer or homeowner to access accurate, detailed mortgage offers from a marketplace, without revealing any identifying information to that marketplace, while our Home Advisors are there to answer any questions, and provide personalized, unbiased advice.

Whether you’re looking to purchase your first home or refinance an existing loan, we’re working hard to ensure the process is fair and equitable.


In February 2022, Own Up conducted an online survey of 1,000 adults in the US who have secured a mortgage in the last five years or are in the process of securing a mortgage. Respondents are not affiliated with Own Up.

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