An informed consumer is one who shops around for the best deal. This includes when shopping for a mortgage as well.
However, according to the U.S. Consumer Financial Protection Bureau, “a report of recent mortgage borrowers found that almost half” do not shop around. Also, 77 percent of those who apply for a mortgage apply with only one lender or broker, instead of filing multiple applications with different lenders and brokers “to see which can offer the best deal.”
Failing to shop around can cost consumers, the agency notes, since consumers can find “substantial differences” in interest rates when comparison shopping.
The CFPB states that “a 30-year fixed rate conventional loan” could show an interest rate variance of “more than a half a percent.” A difference, for example, between a 4 percent loan interest rate and 4.5 percent on a $200,000 mortgage “means you’ll pay off an additional $1,400 in principal in the first five years” and payments will be almost “$60 a month less” (or over "$3,500 over just the first five years”).
For more information, see “Nearly half of mortgage borrowers don’t shop around when they buy a home,” available from the CFPB at www.consumerfinance.gov/blog/nearly-half-of-mortgage-borrowers-dont-shop-around-when-they-buy-a-home/.
The CFPB also maintains an interactive, online resource to assist mortgage borrowers, titled “Owning a Home” (available at www.consumerfinance.gov/owning-a-home).
Opinions are solely the writer's. Joseph Pellicciotti is a lawyer, professor and vice chancellor at Indiana University Northwest.
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