A piece of advice I often give to homebuyers is to shop around - not just for their property, but for their financing. It might seem that most buyers would do this, but new findings from Fannie Mae in their National Housing Survey showed that more than a third of home buyers did not shop around before selecting their mortgage lender. That means that many people potentially are missing out on thousands of dollars in savings.
In the survey, respondents say they received only one quote because they were more comfortable with the particular lender they chose. They also said they had less concern with competitive terms when selecting a lender and put more weight on other priorities like responsiveness and having an account with a lending institution.
As Realtors, we are often sources of advice in many areas, including lender selection. Because of this, Realtors have a key role in encouraging homeowners to seek multiple quotes when mortgage shopping says Doug Duncan, Fannie Mae’s chief economist.
Comparison shopping for a mortgage can be time-consuming and complicated. “Simply evaluating the ‘price’ of a mortgage involves looking at several interrelated components—including rates, fees, and points—and making an assumption about how long a borrower will stay in that mortgage,” Duncan notes. “While it’s easy to find ‘teaser’ rates advertised online, a true mortgage quote is based on a handful of variables that are unique to each buyer and evaluated differently by each lender.”
In fact, another study from LendingTree shows that women are specifically missing out on deals on their mortgage. LendingTree’s study shows that first-time buyers and repeat borrowers who are women reported being less familiar with all aspects of the mortgage process. “It seems women are paying a higher price to access homeownership than they should,” researchers note in the study. Single women accounted for about 20% of the 7 million home sales in 2018, and researchers say they may have overpaid by more than $1 billion because of failure to shop around for a mortgage.
Credit history, down payment, and the ratio of monthly debt payments to income are usually given the most weight in determining a mortgage offer. But other factors besides rates can affect a loan. Fees and points can also impact the “cost” of a loan.
There’s a lot to consider when it comes to obtaining a loan. A Realtor can guide you through the process to help you feel more comfortable and less overwhelmed. That’s Who We R.