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If you’re not taking the time to shop around for the best mortgage before you buy a home, you’re flushing money, potentially lots of it, down the drain.
That’s according to a new report from the Consumer Financial Protection Bureau, which reports that nearly half (47 percent) of American homebuyers don’t comparison shop for a mortgage. It added, “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.”
“People may well put more time and effort into shopping for smaller products such as appliances and televisions than they do in shopping for the right mortgage,” CFPB director Richard Cordray said in a statement.
It’s a potentially costly mistake. According to Money, if you get a conventional 30-year fixed-rate mortgage for $200,000, the difference between a 4 percent and a 4.5 percent interest rate over the life of the loan is a whopping $21,000. (Money used Bankrate’s mortgage payment calculator.)
The CFPB said 7 in 10 homebuyers reported relying on lenders for home loan information. Cordray said:
“Certainly lenders and brokers can be valuable resources. But it is worth recognizing that they also have an important personal stake in selling the mortgage. What is best for them is not always going to be best for the consumer.”
In an effort to encourage homebuyers to shop around for a mortgage and become informed shoppers, the CFPB has unveiled a new website called Owning a Home, which contains user-friendly tools to help guide consumers through the homebuying process.
The site allows consumers to check potential interest rates available to them, presents information about the different types of home loans available, and provides a closing checklist.
Meanwhile, Money Talks News’ Stacy Johnson has some mortgage shopping tips in this video.
Did you shop around for a home loan when you purchased your house? Share your comments below or on our Facebook page.