When it comes to mortgage rejections, Fla. is No. 1

What happens after a home sale closes and the new buyer has keys in hand? In the days and months that follow, how do most new homebuyers feel?

To determine new homeowners’ satisfaction, NerdWallet created its first Home Buyer Reality Report. It looked at owner satisfaction with the buying and lending process, mortgage preapproval, borrowers who failed to make it to closing and successful buyers’ regrets after they sign their final document.

Mortgage failures

Florida stood out in the study for mortgage failures: Almost 1 in 5 mortgage applications (17.1 percent) get turned down, making it the top state in the study for frustrated mortgage applicants. West Virginia ranked second with 15.7 percent of mortgage applicants failing to get a loan.

On the flipside, Minnesota had the lowest rate of mortgage rejection at 7.7 percent, followed by Alaska with 8.2 percent.

Buying a home – and finding the right mortgage – is a journey that can test your grit and resolve. If you haven’t done the proper research and you don’t know what to expect from the process, it can be even more stressful. Your credit history, income, assets and savings will be under scrutiny, and what you don’t know about mortgages can hurt you.

Nationwide, 6 percent of survey respondents said they were denied a loan: 50 percent on their first try and 25 percent more than once:

• 79% were told why their mortgage was denied
• 41% thought the denial unfair
• 33% thought it was embarrassing
• 35% said it pushed them to improve their financial situation
• 52% denied to a high debt-to-income ratio; 39% credit history/score and 25% insufficient income

“Borrowers who don’t understand the mortgage process or don’t know enough about their own credit history tend to hit obstacles or be rejected when applying for mortgages,” says Tim Manni, mortgage expert at NerdWallet. “They also tend to feel regret after their deal is done, even if they succeeded in buying a home. That tells me borrowers aren’t doing enough research – on themselves or the mortgage process – before applying for a home loan.”

Other key findings

• 41% of mortgage applicants felt didn’t know all their loan options during the process
• 49% said they would have done something differently
• 28% felt they weren’t a priority to their mortgage professional
• 42% said the homebuying process was: stressful, complicated (32%) or intimidating (21%)
• 41% said the process was manageable; 30% said it was rewarding
• 27% of millennials got a mortgage rate they thought they could afford when purchasing
• 11% of millennials didn’t feel financially secure after purchasing
• 26% of Gen X applicants said the mortgage experience wasn’t positive compared to millennials, even though they were just as likely to be approved
• 25% of millennials, 20% of Gen X and 10% of baby boomers were approved at a higher interest rate than expected

Source: Florida Realtors