When it comes to researching which purchases best fit their finances, buyers said they spent more time browsing for cars and vacations than they did mortgages, a recent survey by Zillow Home Loans said.
Seventy-two percent of prospective homebuyers reported that they have not shopped around for a mortgage and they don't intend to, the survey said.
By contrast, survey respondents said they spent a month researching other items before buying them, including their next car purchase (28%), their next vacation (23%) and their next TV purchase (12%).
Only 13% of respondents said that they spent a month researching mortgage lenders before they applied, the survey said.
Nearly half (46%) of would-be buyers applying for a mortgage only submitted one application, which put them at risk of missing out on significant savings throughout their mortgage, the survey said.
"While TVs offer warranties and replacement plans in case something breaks, sometimes you only get one chance to get the right home loan structure and strategy in place," Jim Black, executive director of lender strategy at Calque, said. "Markets move, home values go up and down and qualifications can change, which makes it crucial to work with a local expert that can offer you several different programs to make a concrete decision for the long term.
"Knowing before you owe is the most important part of choosing your home loan lender confidently," Black continued.
If you think you're ready to shop around for a mortgage loan, you can use the Credible marketplace to help you easily compare interest rates from multiple mortgage lenders and get prequalified in minutes.
Here’s how much borrowers can save by comparing rates
Even one extra quote on a mortgage could save borrowers "an average of $1,500 over the life of the loan," and "an average of about $3,000 for five quotes," according to Freddie Mac. And savings can fluctuate more when the economy is in decline.
"So in bad economic times, the gains provided by rate shopping are even greater," Freddie Mac said. "For example, during one such period in the depths of the global financial crisis [the week of December 11, 2008], borrowers with a $250,000 mortgage could have saved $5,020, on average, if they had obtained five rate offers."
Despite the potential savings, many Americans reported that they didn't mortgage shop, the Zillow survey said.
Here are the top three reasons why, according to the survey:
- 30% were worried shopping would hurt their credit score
- 24% were happy with the lender they contacted first
- 19% didn't want to spend the time shopping for mortgages
If you're buying a home or looking to refinance your current mortgage, you can visit Credible and compare multiple mortgage lenders to find the right option for you.
Focusing on credit is another way buyers can save money
Buyers can save additional money on their home financing needs by understanding and improving their credit profile, the survey said.
A separate Zillow analysis from earlier this year showed that borrowers with an "excellent" credit score — between 760 and 850 — could be saving up to $103,626 in mortgage interest payments over the life of a 30-year fixed-rate loan, based on a typical home priced at $354,165.
Buyers with "fair" credit scores — between 620 and 639 — may be paying up to $288 more on their monthly mortgage payment than those with "excellent" credit.
"Home buyers should take the time necessary to make an educated decision on their mortgage," Libby Cooper, vice president of Zillow Home Loans, said. "It's often the largest financial decision someone makes.
"Taking time to understand their credit report, repair any issues and consult with a qualified mortgage professional can make a significant difference in a home shopper's experience," Copper continued.
If you are interested in taking advantage of current mortgage rates, you could consider refinancing your loan to lower your monthly payment. Visit Credible to find your personalized interest rate without affecting your credit score.
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