Mortgage Journeys: Identifying New Homebuyer Challenges
- Fannie Mae wanted insight into low-income first-time homebuyers’ mortgage experiences.
- Abt conducted a video ethnography of prospective homebuyers over nine months.
- We learned that homebuyers need different kinds of mortgage shopping support.
Fannie Mae had conducted extensive research with various groups of consumers (e.g., renters, young adults, delinquent borrowers, homeowners, refinancers, etc.), including several survey research projects to examine how consumers shop for mortgages. To better help their clients, Fannie Mae wanted to learn about the mortgage shopping experiences of low- and moderate-income first-time homebuyers in more depth and in real time. In particular, Abt Associates was asked to gather insights into these consumers’ personal finances and the barriers to homeownership that they encountered.
From October 2014 through December 2015, Abt conducted an ethnographic video research project. We developed robust case studies of participants through video diaries they recorded approximately weekly, regular interviews over four to nine months (depending on their stage in homebuying), observing housing appointments and mortgage closings, and reviewing documents. Their incomes ranged from $24,000 to $95,000 in Greater Boston and $15,600 to $58,000 in East Tennessee. Because data were gathered over a prolonged period of time—and iteratively--we were able to develop a holistic understanding of homebuyers’ issues through tailored, evolving questions.
Using the ethnographic approach, we were able to establish rapport with homebuyers over time, which provided insight to their challenges (e.g., prior denials of credit, family emergencies) and evolving circumstances and feelings about the home purchase. The results provided a better understanding of how home purchase was prolonged and non-linear for most of our participants—variations not usually evident from one-time data collection or baseline and follow-up interviews.
Notably for Fannie Mae, we found that homebuyers were more focused on shopping for homes than mortgages and the structure of the homebuying transaction was not conducive to following best practices for mortgage shopping. The result was homebuyers sometimes were not prepared or able to purchase those homes, and may not have received the most suitable mortgage for their situation. Not only did this behavior indicate inconsistencies in participants’ self-reporting on their financial behaviors, it gave Fannie Mae the insight they can use to better support these homebuyers.