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Last updated on February 3rd, 2021 at 12:17 pm
To achieve your American dream of having your home, you need to shop, and shop right, more than credit score or down payment amount who you decide to bank with can matter more!
Many home buyers miss out on substantial savings by not shopping around to get the best financing deal.
A mortgage, if it is a home purchase, a refinancing, or a home equity loan — is a product, so the price and terms may be negotiable. You will want to compare all the costs involved in obtaining a mortgage.
Shopping, comparing, and negotiating may save you thousands of dollars. An average borrower could save $1,500 just by getting one extra rate quote when applying for their mortgage. With five quotes, they could save $3,000 or more.
Different lenders may quote you different prices, so you should compare mortgage quotes and contact several lenders to make sure you are getting the best price.
Freddie Mac reported, “Many consumers do not seem to realize that the rates offered by lending institutions vary widely.” Less than half of today’s borrowers shop around for rates when getting a mortgage or refinancing.
Ralph McLaughlin, chief economist at Haus, a start-up company wrote –
“The variation in mortgage rates is driven much more immediately by lender and property location than by reasonable borrower improvements in credit score, debt-to-income, and down payment amounts.”
According to David Edmondson, a senior loan officer at Flagstar Bank in Boston, interest rates vary from one-eighth percent to a half-percent from lender to lender.
On a $300,000 loan, a half-percent difference means more than $1,000 in savings per year.
When we think – In spite of a chance to save a phenomenal amount what is holding today’s buyers back?
One of the reasons for not rate shopping is that buyers wait to the last minute, Buyers often don’t think about the terms of the mortgage until they have signed a purchase agreement.
Once that happens, they are dealing with deadlines and often end up going with whomever their Realtor recommends. While this can be quick and convenient, it could be costly as well.
Mortgage rates vary greatly — from day to day and lender to lender. According to Freddie Mac’s data, in a single week borrower received rates anywhere from 4.2% to 4.8%.
If borrowers only search once, some will get lucky and get a low rate, others will get a high rate, and many will get a rate of around 4.5%.
According to Anthony Casa, President of Garden State Home Loans and chairman of the Association of Independent Mortgage Experts –
On an average, buyers who get one extra quote will save anywhere from $966 to $2,086 over the life of their loan.
For five quotes, buyers will save $2,089 to $3,904. “If you shop around, you could get as much as full three-quarters of a percent difference.”
Ralph McLaughlin, chief economist at Haus said “I think what surprised me the most was … just by the fact of where you live and who you decide to bank with can make up to over a 100 basis points difference or over one percentage point difference in your mortgage rate, that’s a non-trivial amount, especially over the life of a mortgage.
Rate shopping is especially important in today’s market, as home prices continue to rise.
Reference Source: The Washington Post
