Shopping Around for Mortgage Could Save Borrowers $76,000+ Over Lifetime of Loan
Though steep mortgage rates have made homebuying considerably more expensive than a few years ago, shopping around for a mortgage and comparing offers from different lenders could still help borrowers save a significant amount of money.
To show how much money those who shop around could save, LendingTree analyzed data from about 34,000 users of our online loan marketplace who received two or more offers from mortgage lenders in 2024. Using this data, we determined how much borrowers in each of the nation’s 50 states could save if they chose the lowest APR offered instead of the highest.
For more information on how we calculated these savings, see the methodology.
Key findings
- Based on average loan amounts and APR spreads for 30-year, fixed-rate mortgages, borrowers across the nation’s 50 states could save an average of $76,410 over the lifetime of their loans by shopping around for a mortgage. That breaks down to an average savings of $212 a month and $2,547 a year.
- Three states with expensive home prices, California, New Jersey and Hawaii, are where shopping around could save borrowers the most money. Respectively, borrowers in these states could save $131,190, $127,125 and $115,947 over the lifetime of their loans by shopping around for a lower rate before buying. Potential lifetime savings are greater than $100,000 in two other states: Washington ($115,026) and Minnesota ($103,555).
- Regardless of the state in which they’re living, borrowers could save serious money shopping around for a mortgage. Even in the state where potential savings are lowest, South Dakota, borrowers could still save more than $35,000 over their loan’s lifetime by shopping around for a mortgage.
- Nationwide, the spread between the average highest and lowest APRs offered to borrowers who shopped around for a mortgage and received offers from two or more lenders is 92 basis points. This spread varies from as high as 146 basis points in Minnesota to as low as 58 in Alaska.
- In addition to the aforementioned Minnesota, borrowers in Nebraska and Wisconsin see the largest spreads between the lowest and highest average APRs. The spread is 138 basis points in Nebraska and 135 in Wisconsin. Put another way, APRs offered by different lenders to the same borrowers in these states frequently differ by more than a percentage point.
10 states where borrowers could save the most by shopping around for a mortgage
No. 1: California
- Average lowest offered APR: 6.71%
- Average highest offered APR: 7.70%
- Spread between average lowest and average highest APR: 0.99 percentage points
- Average requested mortgage amount: $541,763
- Lifetime savings: $131,190
No. 2: New Jersey
- Average lowest offered APR: 6.65%
- Average highest offered APR: 7.81%
- Spread between average lowest and average highest APR: 1.16 percentage points
- Average requested mortgage amount: $448,065
- Lifetime savings: $127,125
No. 3: Hawaii
- Average lowest offered APR: 7.10%
- Average highest offered APR: 7.88%
- Spread between average lowest and average highest APR: 0.78 percentage points
- Average requested mortgage amount: $607,092
- Lifetime savings: $115,947
No. 4: Washington
- Average lowest offered APR: 6.78%
- Average highest offered APR: 7.78%
- Spread between average lowest and average highest APR: 1.00 percentage points
- Average requested mortgage amount: $473,474
- Lifetime savings: $115,026
No. 5: Minnesota
- Average lowest offered APR: 6.45%
- Average highest offered APR: 7.91%
- Spread between average lowest and average highest APR: 1.46 percentage points
- Average requested mortgage amount: $292,431
- Lifetime savings: $103,555
No. 6: Oregon
- Average lowest offered APR: 6.88%
- Average highest offered APR: 7.89%
- Spread between average lowest and average highest APR: 1.01 percentage points
- Average requested mortgage amount: $400,999
- Lifetime savings: $98,965
No. 7: Maryland
- Average lowest offered APR: 6.86%
- Average highest offered APR: 7.81%
- Spread between average lowest and average highest APR: 0.95 percentage points
- Average requested mortgage amount: $422,719
- Lifetime savings: $98,339
No. 8: Arizona
- Average lowest offered APR: 6.92%
- Average highest offered APR: 7.91%
- Spread between average lowest and average highest APR: 0.99 percentage points
- Average requested mortgage amount: $384,763
- Lifetime savings: $93,802
No. 9: Massachusetts
- Average lowest offered APR: 7.05%
- Average highest offered APR: 7.87%
- Spread between average lowest and average highest APR: 0.82 percentage points
- Average requested mortgage amount: $459,402
- Lifetime savings: $93,042
No. 10: Georgia
- Average lowest offered APR: 6.86%
- Average highest offered APR: 7.88%
- Spread between average lowest and average highest APR: 1.02 percentage points
- Average requested mortgage amount: $356,120
- Lifetime savings: $89,339
Why shopping around could result in significant savings
As this study shows, shopping around for a mortgage could help homebuyers lower their monthly payments and save hundreds of dollars a month and tens of thousands of dollars over the lifetime of their loans. These savings are possible because different lenders can offer different mortgage rates to the same borrowers.
Why is this the case?
Across the board, almost all mortgage lenders will look at factors like annual incomes and credit scores before signing off on a loan. They do this because looking at these factors helps them decide how risky it would be to work with a borrower. The riskier a borrower appears, the more financial incentive a lender will need to consider doing business and — as a result — the more money in interest it will likely charge.
But just because lenders tend to look at the same general criteria when calculating risk doesn’t mean they do so the same way. Nor does it mean they all have the same wants and needs when choosing borrowers with whom they want to work. Because of this, some lenders may feel more or less inclined to work with a potential borrower than others. In turn, different lenders might offer notably different rates to the same person.
Ultimately, in the same way that individual homebuyers aren’t a monolith, neither are mortgage lenders. Knowing this can not only help would-be borrowers get a lower rate and save money, but it can also help them find a lender willing to work with them.
3 tips for getting a lower rate on your mortgage
Besides shopping around for a lender, here are three more tips that could help borrowers get a lower rate on their mortgage:
- Boost your credit score. Your credit score could make a big difference in what rate a lender offers you, so you’ll want to do everything you can to improve your score before applying for a mortgage. While you don’t need perfect credit before applying, a higher score could help you save tens of thousands of dollars over the lifetime of your loan.
- Think about buying mortgage points. When you get approved for a loan, some lenders may give you the option to buy mortgage points, also known as discount points. Essentially, buying these points allows you to prepay interest on your loan and access a lower rate. If you have some extra cash and plan to stay in your home for a while, mortgage points can be a great option to consider.
- Consider a shorter loan term. Though shorter-term loans will typically have higher monthly payments, they tend to come with considerably lower rates than longer-term loans. For those who can afford them, getting a shorter-term loan — like a 15-year mortgage — could help save a significant amount of money in interest over their loan’s lifetime.
Methodology
We analyzed data from 34,009 users of LendingTree’s online loan marketplace who received two or more offers for 30-year, fixed-rate mortgages from lenders from Jan. 1 through May 6, 2024.
Specifically, we looked at the lowest and highest APRs offered to individual users in each of the nation’s 50 states, excluding the District of Columbia. With that data, we calculated the average lowest and highest APR offered to users in a given state who received two or more offers (see below for examples).
Using these APRs, we calculated two hypothetical monthly payments that a borrower would have to make if they received a loan equal to the average requested mortgage amount made by LendingTree users in their state. One payment assumed their loan came with the highest average APR calculated for their state, while the other assumed their loan came with the lowest average APR calculated for their state.
The difference between these two payments is the borrower’s potential monthly savings. We multiplied these monthly savings by 12 and 360 to find the annual and lifetime savings.
It’s important to reiterate that we didn’t compare the single lowest and single highest APRs offered to users in a given area when calculating the potential monthly payments. Instead, we compared an average of the lowest and an average of the highest APRs offered to individual users.
For example, consider a hypothetical state with three users who each received two offers from lenders on the LendingTree marketplace. The following table breaks down what they could be offered:
| User | Offered APR from lender No. 1 | Offered APR from lender No. 2 |
|---|---|---|
| User 1 | 7.22% | 7.99% |
| User 2 | 8.44% | 7.90% |
| User 3 | 7.95% | 8.10% |
For this study, LendingTree wouldn’t calculate the difference in mortgage payments for a loan with a rate of 7.22% (the lowest rate offered) and a rate of 8.44% (the highest). Instead, we would calculate the difference based on an average of the lowest rates offered to each individual user (7.22%, 7.90% and 7.95%) and the average of the highest rates offered to each individual user (7.99%, 8.44% and 8.10%). In this case, those averages would be 7.69% and 8.18%, and the spread between them would be 49 basis points.