Home Buyers Must Read: Shop Around for Your Mortgage Loan

It’s been in the news for awhile—mortgage rates are low. And not just low, they’re really low—the lowest they’ve been in more than three years.

But even though rates are low, they do vary from buyer to buyer and you’re not guaranteed the low rate you see posted online. A recent case study by Lending Tree confirmed what expert real estate agents have always passed along to their clients: Comparison shopping is extremely important—no matter how low the rates seem to go.

WOULD YOU WANT TO PAY $66,000 EXTRA FOR YOUR HOME?

The study found that home shoppers in San Francisco who only get one mortgage quote will spend about $66,000 extra in interest by the end of their loan term. However, San Francisco buyers that shopped around saved about $186 off their monthly payment and more than $2,000 annually.

This information is not unique to San Francisco—the study found those receiving only one quote in Fresno, California, spend an additional $61,000 on interest as well. This finding remained true for each major city they looked at including Los Angeles, Phoenix, Boston, and you guessed it, Seattle.

This data isn’t exclusive to home buyers either. If you already own a home and want to refinance, shopping around is equally important. In Louisville, Kentucky, refinancing shoppers who received at least five quotes found rates as far apart as 1.32%. That percentage makes a significant difference over the term of a loan.

In the end, a lower rate will put more money in your pocket. Patrick Boyaggi, CEO of Mortgage loan marketplace Own Up, said, “Some lenders vary the rates and terms they offer based on the different commission plans they offer to their loan originators,” Boyaggi says. “By talking to one loan originator versus another, the rate can change by 0.50% or more. When you are talking about a $400,000 loan, that’s tens of thousands of dollars in excess interest. The money you save by searching for your best deal can be used toward other financial goals, like saving for retirement or a child’s college tuition.”

If you’re feeling overwhelmed and don’t know where to start, The Sessoms Group would be more than happy to guide you through the process.