You probably shopped around before buying your last TV to get the best deal. After all, saving $100 on a TV feels pretty good. So imagine how saving thousands on a mortgage might feel.
Unfortunately, too few Americans get that feeling. Because when it comes to mortgages, homebuyers are not doing enough shopping, according to a report published in January by the Consumer Financial Protection Bureau (CFPB).
In fact, the report found that nearly half of homebuyers (47%) fail to compare lenders. The report went on to say that comparing as few as three lenders could save you thousands by getting you a lower interest rate.
"Consumers spend considerable time looking at different neighborhoods and different homes for sale. The same should be true of choosign among possible mortgage loans," CFPB Director Richard Cordray testified to Congress last year.
The CFPB gave an example of a borrower who shopped three lenders on a $200,000, 30-year, fixed-rate mortgage. In their scenario, they found the difference in going with the lowest of the offered rates would result in a monthly payment of $60 less, and an additional $1,400 saved in principal in the first five years alone. The total savings in five years would be an impressive $3,500.
Great. So, How Do I Shop Lenders?
Easily and from the convenience of your own couch. LendingTree, one of the nation’s most respected mortgage comparison websites, is a free service that connects you with up to five different banks. Lenders compete for your business and you pick the best rate and terms for you.
The result is that you could save a lot of money. In fact, LendingTree conducted its own study, which included data from more than 20,000 borrowers. The results echoed what the government study found: Shoppers who compared five different mortgage offers could save $24,000 over the life of their loan due to the difference of the interest rate being offered.
Now that’s a really nice TV.*The CFPB report did not provide information on whether this was the advertised rate or APR.
Rates and information accurate at the time of publication. Rates and information may have changed since publication. Please check with your lender for updated rates, terms, and conditions.