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The Value of Comparing Offers

Buying a home is a big purchase, but it’s just that: a purchase. When it comes to spending money on our daily expenses, people have lots of options to help them find the best deal possible.

Most people shop to find the best price for laptops or appliances, but a report of recent mortgage borrowers found that almost half of don’t shop around for a mortgage when buying a home.

Failing to shop for a mortgage could cost you. Consumers who consider interest rates offered by multiple lenders or brokers may see substantial differences in the rates. For example, Consumer Financial Protection Board (CFPB) research showed that a borrower taking out a 30-year fixed rate conventional loan could get rates that vary by more than half a percent. Getting an interest rate of 4.5% instead of 5.0% translates into approximately $90 in payment savings per month. This adds up to $32,400 in monthly payment savings over the life of a typical 30 year amortized mortgage.

The CFPB survey of mortgage borrowers also found that modern mortgage borrowers:

  • Often fail to shop: Almost half of borrowers seriously consider only a single lender or broker before deciding where to apply.
  • Apply to only one lender or broker: 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 – to their own detriment.
  • Rely on information from people with something to sell: Lenders and brokers were the most popular source for information about mortgages, with 70 percent of mortgage borrowers reporting that they used them “a lot” as a source of information. Thirty percent of borrowers say they relied heavily on their real estate agent for mortgage information. While lenders, brokers, and real estate agents can be informative, they also have a stake in the transaction.

Due to the large savings available from comparison shopping, it is clear that mortgage borrowers should be shopping around. Beazer created Mortgage Choice to make this fast and easy.

Click here to read the full CFPB article.