CHICAGO Americans are confused about mortgages and many other financial aspects of homeownership, according to a new survey of about 1,000 prospective buyers and homeowners conducted by JW Surety Bonds.

One in three renters say their lack of knowledge about homeownership has caused them to delay a home purchase, while homeowners admit to making some costly mistakes in the homebuying process because of a low homeownership IQ.

Real estate professionals must play the role of an educator, helping to clear up their clients misunderstanding about a home purchase. Its clear that improved education and resources could help foster Americans homeownership success, researchers note in the JW Surety Bonds survey. As the housing market continues to change, so must our approach to homeownership literacy.

The gaps in homebuying knowledge

Aside from confusion about mortgages, home buyers also appear to misunderstand the added costs involved when buying a home, such as closing costs and property maintenance. The JW Surety Bonds survey uncovered the following consumer knowledge gaps about homeownership:

Unaware of key real estate terms.One in eight buyers surveyed could not accurately define what a mortgage is, and 43% were unsure of the meaning of mortgage rate, the survey found. That knowledge gap may be alarming, considering that 74% of buyers financed their home purchase with a mortgage in 2024. You can provide your clients withNARs Consumer Guide on mortgages and financing, as well as acustomer handout on loan and lending terms to know.

Failing to shop around for a mortgage.Forty-one percent of homeowners say they did not feel confident negotiating mortgage rates or refinancing terms with a lender, the survey found. But the average borrower could save an average of $76,410 over the life of their loanor $212 a monthjust by comparison shopping for a mortgage and negotiating rates, according to a 2024 survey from LendingTree. Also, many buyers say they were unaware of more affordable loan options, such as FHA loans, VA loans (you can shareNARs Consumer Guide on what veterans need to knowabout buying a home) and other low down payment programs that couldparticularly impact first-time home buyers.You can provide your clients withNARs Consumer Guide on buying your first home, as well as acustomer handout on questions to ask when choosing a lender.

Not budgeting for hidden homeownership expenses.More than a quarter of homeowners27%say they were caught off guard about unexpected fees during the homebuying process, according to JW Surety Bonds research. Real estate professionals can help their clients prepare for the added costs, such as property taxes, homeowners insurance, homeowners association fees (if applicable) and routine property maintenance. (Most financial advisers recommend saving 1% to 2% of the homes purchase price annually.) Whats more, 40% of homeowners say they do not use an escrow account to pay their property taxes, which could expose them to large annual tax bills, the surveys researchers caution. You can provide your clients withNARs Consumer Guides on homeowners insurance including specific guidance on flood and fire coverage andescrow and earnest money. Also, you can share acomprehensive overview of transactions involving homeowners associations.

Not paying attention to home affordability.Some home buyers may be at risk of overspending on their home purchase. It could lead to buyers remorse: One in nine homeowners say they regret buying their home due to unexpected costs they learned about only after closing. Further, one in nine homeowners say they spend more than 50% of their monthly income on housing costs a percentage that most financial experts would consider severely cost-burdened. Another 36% of homeowners say they did not have an emergency fund to cover unexpected home repairs, leaving them vulnerable to further financial strain, the survey notes. You can shareNARs Consumer Guide on preparing for homeownershipand provide acustomer handout with a worksheet to track your clients budgets.

Where home buyers can turn for guidance

Some prospective home buyers are on the lookout for more answers and guidance on the homebuying process. NAR has many Consumer Guides covering various aspects of the process, fromwritten buyer agreementstohome inspectionsandappraisals, atfacts.realtor. Here are other top sources consumers cite for gathering homeownership information, according to the JW Surety Bonds survey:

• Friends or family: 64%
• Articles or blogs: 49%
• Real estate agents: 31%
• YouTube: 29%
• Financial advisers: 17%
• Online courses: 14%
• TikTok: 13%

How real estate agents can improve homebuying education

Real estate professionals may be able to help improve their clients homeownership literacy while also expanding their outreach. Try this:

• Host education seminars. Team with lenders or financial advisers to offerbuyers education seminarsthat highlight the financial aspects of a home purchase, such as the types of loans available and getting pre-approved for a mortgage.Loans and grants for first-time home buyersmay help your clients better afford homeownership.
• Talk real estate on social media. Glennda Baker, an associate broker with Glennda Baker + Associates, Inc., in Atlanta, has amassed more than 870,000 followers on TikTok with her short-form real estate education videos. Her videos cover a range of topics, including homebuying mistakes, financing a home purchase and living under a homeowners association.
• Customize your consumer handouts. Publish content on your blogs and newsletters and provide handouts about the various aspects of home buying. Realtor Magazine offerscustomizable client education and handoutsthat detail the steps involved in a home purchase, from financing to closing.

When you are ready to buy or sell real estate, please call me, Marie McLaughlin 727-858-7569.

Source: https://www.floridarealtors.org/news-media/news-articles/2025/03/helping-home-buyers-understand-financing