According to the (Federal) Consumer Financial Protection Bureau, almost half (47%) of borrowers don’t compare the offerings of multiple lenders when applying for a mortgage, and as a result, often leave money on the table.
“Getting an interest rate of 4.0% instead of 4.5% translates into approximately $60 savings per month. Over the first five years, you would save about $3,500 in mortgage payments. In addition, the lower interest rate means that you’d pay off an additional $1,400 in principal in the first five years, even while making lower payments.” – CFPB
The CFPB made the following findings:
The survey of 2013 mortgage borrowers also found that modern mortgage borrowers:
Often fail to shop: Almost half of borrowers seriously consider only a single lender or broker before deciding where to apply.
Apply to only one lender or broker: Seventy-seven percent of borrowers only end up applying with a single lender or broker, instead of filling out applications with multiple lenders or brokers to see which can offer the best deal.
Rely on information from people with something to sell: Lenders and brokers were the most popular source for information about mortgages, with 70 percent of mortgage borrowers reporting that they used them “a lot” as a source of information. Thirty percent of borrowers say they relied heavily on their real estate agent for mortgage information. While lenders, brokers, and real estate agents can be informative, they also have a stake in the transaction. The report found many fewer, 20 to 41 percent of borrowers, get a lot of their information from outside sources such as websites, financial and housing counselors, or friends, relatives or coworkers.
Shop more if they know more: Borrowers who were confident about their knowledge of available interest rates were almost twice as likely to shop as consumers who reported being unfamiliar with available interest rates.
You can find the full article here. If you are in the process of buying a home, you might also find the “Owning a Home” tool to be useful.
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