While most Americans compare prices before making a big purchase, significantly less do the same when it comes to their mortgage, which means possibly missing out on savings, according to a survey by LendingTree.
Only half of homeowners comparison shopped for their mortgage, and yet 89% reported comparing prices for other big purchases. Right now, mortgages rates are varying over 1% between lenders.
“Deciding on a mortgage is likely the most important financial decision consumers will ever make, yet borrowers are more often than not taking the first offer that comes their way, failing to fully capitalize on low rates,” Doug Lebda, founder and chief executive officer of LendingTree, said in a statement.
According to LendingTree, rate variance is high given the current low rate environment. Rates for a 30-year fixed rate mortgage loan can vary by as much as 1.5%. On a $260,000 loan the difference between a 3.25% quote and 4.625% is a savings of $214 a month, $2,568 a year and $74,000 over the life of a 30-year fixed rate loan.
“It is important for borrowers to understand that they have the power to choose which loan and which lender to use,” Lebda said. “It is acceptable to negotiate with lenders and to walk away if you are not fully satisfied. Consumers need to be engaged in the mortgage process to secure the best deal.”
The study also revealed that women were twice as likely as men to not be involved. Of female mortgage holders ages 18 to 34, 45% were not involved in obtaining their mortgage compared to 21% of women ages 35 to 44 and 16% of women 45 to 54 years old.
“Many people approach the process of getting a mortgage with apprehension, thinking they have very little control of the end result,” Lebda said. “But rushing through the process without comparing loan offers could be a costly mistake.”
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