When it comes to getting a mortgage, comparing lenders and shopping around can get you the best rates, but a recent survey by LendingTree shows most people are not doing that.
The company recently surveyed more than 1,000 homeowners to find out why some compare and save, while others believe they got the best rate without seeing competing loan estimates.
Here’s are the key findings from the survey:
- 56% of mortgage borrowers didn’t compare offers from more than one lender to find their best rate. Women, baby boomers and low-income borrowers were less likely to shop around. But why not shop around? The majority of respondents who didn’t shop around say they were confident they got the best rate (48%)—though that may not have been true.
- Nearly half of those who compared rates were able to save money. 46% of borrowers who shopped around for mortgage rates say the first offer they received was not the lowest rate.
- A third of homeowners say mortgage rates impacted their homebuying time frame. Notably, 23% bought a home earlier than planned to take advantage of low rates. That jumps to 36% among millennial homeowners and 28% among first-time homeowners.
- Real estate agents are the No. 1 way homeowners get connected with their lenders, representing nearly a third (31%) of borrowers. Further, 51% of homeowners first met with a real estate agent to kick off the homebuying process before meeting with a bank to learn how much house they could afford.
- 55% of homeowners borrowed the maximum amount for which they were preapproved, but this can lead to unaffordable monthly payments. First-time homebuyers were more likely to take out the maximum mortgage than those who have owned before (59% versus 50%). Prospective borrowers should use a monthly payment calculator to better understand the impact of payments on their budget.
“Though many people might not realize it, shopping around for a mortgage before you buy can help you get a lower rate and save tens of thousands of dollars over the lifetime of your loan,” said Jacob Channel, LendingTree’s senior economic analyst and report author.
To view the full report, click here.