The $9,000 Mistake That Many Homeowners Make

home expenses
Photo by Fertas / Shutterstock.com

Few folks would buy a home after looking at just one. Money Talks News founder Stacy Johnson says home shoppers who look at only three homes are nitwits.

Yet plenty of homebuyers sign on the dotted line after contacting only one mortgage lender or getting only one quote, according to a U.S. Consumer Financial Protection Bureau mortgage shopping study released earlier this year.

Shopping around — or lack thereof

The main goal of the study was to examine the effect of mortgage comparison shopping. Thousands of consumers in the U.S. who went through the homebuying process in 2016 were surveyed for the study, with polling conducted throughout the homebuying process.

Mortgage shopping was gauged by the number of:

  • Lenders that participants contacted
  • Preapproval letters that participants obtained
  • Loan estimates that participants received

Some 4,100 study participants ended up buying a home. These homebuyers reported that on average, they:

  • Contacted 2.04 lenders
  • Obtained 1.96 preapproval letters
  • Received 1.37 loan estimates

Because these numbers are averages, it means plenty of the homebuyers did not shop around for mortgage lenders or estimates.

An expensive mistake

Part of the reason for this may be that only 15 percent of folks know that submitting multiple mortgage applications in the same week does not hurt the applicant’s credit score, as the CFPB’s study found.

But whatever the reasons for it, failing to shop around for a mortgage can cost you big.

Prior CFPB research found that the difference between the average person’s actual mortgage interest rate and the lowest rate available to them amounts to $300 per year — or $9,000 over the life of a 30-year mortgage. In other words, not shopping around costs the average person $9,000 in extra interest payments.

What it means for you

If you are in the market for a home or will be in the future, learn this cautionary tale before it’s too late.

After many years of historically low mortgage rates, costs have been climbing more recently. So, failing to shop around for a mortgage in coming years could cost you even more than $9,000.

One way to start mortgage shopping — or simply get an idea of what interest rates you could qualify for — is to use Money Talks News’ mortgage comparison tool.

For further guidance, check out “How to Buy a House: Getting the Best Deal on a Mortgage.”

If you already have a mortgage for which you didn’t shop around, it’s not necessarily too late to correct course.

The MTN mortgage comparison tool can help you learn what kind of interest rate you can get if you refinance your mortgage. From there, you could determine whether refinancing is worth it.

If you have a fixed-rate mortgage, refinancing may not be worthwhile now that interest rates are inching upward. But if you have an adjustable-rate mortgage, you may save on interest by refinancing to a fixed-rate mortgage, thereby locking in an interest rate before rates climb higher.

How do you feel about mortgage shopping? Share your thoughts below or on Facebook.

How to find cheaper car insurance in minutes

Getting a better deal on car insurance doesn't have to be hard. You can have The Zebra, an insurance comparison site compare quotes in just a few minutes and find you the best rates. Consumers save an average of $368 per year, according to the site, so if you're ready to secure your new rate, get started now.

Read Next
5 Ways Anyone Can Save on Out-of-Pocket Health Care Costs
5 Ways Anyone Can Save on Out-of-Pocket Health Care Costs

Here’s how to lower your health care costs without skimping on care.

The 5 Most Expensive U.S. States for Retirees
The 5 Most Expensive U.S. States for Retirees

If you have or expect to have a modest retirement income, you may want to avoid spending your golden years here.

Should You Hire a Service to Negotiate Your Cable and Other Bills?
Should You Hire a Service to Negotiate Your Cable and Other Bills?

Services like BillCutterz and BillFixers will negotiate your cable, internet, phone and other monthly bills in exchange for a share of the savings. I tried it: Here’s what happened.

New Ways to Save Money on Insurance of Every Kind
New Ways to Save Money on Insurance of Every Kind

Tech startups are making it easy to find the best rates for all kinds of insurance policies — and get covered fast.

5 Reasons You Should Work for as Long as You Live
5 Reasons You Should Work for as Long as You Live

These benefits might make you think twice about retirement.

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Most Popular
Will I Get My Ex-Husband’s Social Security When He Dies?
Will I Get My Ex-Husband’s Social Security When He Dies?

Two factors determine how much money is coming to you.

7 Ways to Boost Your Credit Score Fast
7 Ways to Boost Your Credit Score Fast

Your financial security might soon depend upon the strength of your credit score.

22 Things You Should Always Buy at a Dollar Store
22 Things You Should Always Buy at a Dollar Store

The dollar store has great bargains on these purchases.

5 Household Disinfectants That Can Destroy the Coronavirus
5 Household Disinfectants That Can Destroy the Coronavirus

You likely already have some of these products at home.

6 Reasons I Will Never Trust Suze Orman
6 Reasons I Will Never Trust Suze Orman

Beware: The self-proclaimed personal finance expert has a track record that suggests more sizzle than steak.

20 Things That Are Actually Worth Stockpiling
20 Things That Are Actually Worth Stockpiling

You probably don’t need a year’s supply of toilet paper to survive an outbreak, but consider stocking up on these items.

16 Amazon Purchases That We Are Loving Right Now
16 Amazon Purchases That We Are Loving Right Now

These practical products make everyday life a little easier.

America’s Most Reliable Appliance Brand Is a Surprise
America’s Most Reliable Appliance Brand Is a Surprise

Have you heard of this appliance manufacturer?

This Type of Social Security Benefit Is Often Overlooked
This Type of Social Security Benefit Is Often Overlooked

The Social Security Administration is not helping certain people get money to which they are entitled, a report says.

Getting These 2 Shots Could Reduce Your Risk of Dementia
Getting These 2 Shots Could Reduce Your Risk of Dementia

These vaccines may lower the risk of Alzheimer’s disease by up to 40%.

9 Everyday Problems You Can Solve With Vaseline
9 Everyday Problems You Can Solve With Vaseline

Forget expensive specialty products. Good ol’ petroleum jelly can address many common annoyances.

19 Purchases That Buyers Almost Always Regret
19 Purchases That Buyers Almost Always Regret

Think twice before buying these things.

7 Tips for Building an Emergency Stockpile
7 Tips for Building an Emergency Stockpile

A pandemic or natural disaster could leave you reliant on your existing food supply. Is your pantry prepared?

19 High-Paying Jobs You Can Get With a 2-Year Degree
19 High-Paying Jobs You Can Get With a 2-Year Degree

These jobs pay more than the typical job in the U.S. — and no bachelor’s degree is required.

8 of the Worst Things to Buy at a Dollar Store
8 of the Worst Things to Buy at a Dollar Store

Not everything sold at dollar stores is a great bargain or a safe purchase. Here’s our list of products to avoid.

41 Things You Should Never Buy
41 Things You Should Never Buy

Some purchases are just plain dumb. Give yourself — and your budget — a break. Don’t spend money on this stuff.

5 Ways to Get Amazon Prime for Free
5 Ways to Get Amazon Prime for Free

Hesitant to drop $119 a year on an Amazon Prime membership? Here’s how to get it for free.

13 Brilliant Bulk-Buy Items on Amazon
13 Brilliant Bulk-Buy Items on Amazon

Every household should have these products on hand. Buying them in bulk on Amazon saves you cash.

8 Award-Winning Products That Impressed 40,000 Shoppers
8 Award-Winning Products That Impressed 40,000 Shoppers

The Product of the Year awards help shoppers find the best pet products, personal care items and everything in between.

View More Articles

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Add a Comment

Our Policy: We welcome relevant and respectful comments in order to foster healthy and informative discussions. All other comments may be removed. Comments with links are automatically held for moderation.