Skipping mortgage rate shopping could cost homebuyers more than $62,000 over the life of a loan.
Borrowers who negotiate often win, with most reporting lower monthly payments after asking for a better deal.
Comparing multiple lenders and reviewing APR, fees, and closing costs can lead to significant long-term savings.
Buying a home is expensive enough without paying more than you have to.
Yet new research from LendingTree suggests that many homebuyers may be doing exactly that by failing to compare mortgage offers from multiple lenders. According to the analysis, borrowers who shop around could save an average of $62,572 over the life of a 30-year fixed mortgage simply by choosing the best available loan offer.
The findings highlight just how much mortgage rates and terms can vary from one lender to another — and why taking the time to gather multiple quotes may be one of the smartest financial moves a homebuyer can make.
To break down what this means for homebuyers, ConsumerAffairs spoke with LendingTree's Chief Consumer Finance Analyst, Matt Schulz.
Homebuyers are skipping the comparison
Many homebuyers don’t think about the savings opportunities available by skipping the mortgage rate comparison. Schulz explained that the primary reason is that consumers don’t know how much money is at stake.
“There’s so much work that goes into buying a home, and mortgage shopping can feel like just another item on an already overwhelming to-do list,” he said. “Some people also assume that rates won't vary much from lender to lender or that their real estate agent's recommendation is automatically the best option. Unfortunately, that can be a costly mistake when shopping around can save the average borrower more than $62,000 over the life of a loan."
Know your negotiating power
One of the findings from the study was about negotiating for a lower mortgage. The survey revealed that women and baby boomers were less likely to negotiate.
“A lot of it comes down to comfort level and expectations,” Schulz said. “Younger borrowers have grown up comparison-shopping online for everything and are often more accustomed to pushing for a better deal. Meanwhile, some older borrowers may assume rates and fees are largely fixed or may not feel the savings justify the effort."
However, it’s also important to note that when you do negotiate, it typically turns out in your favor. The survey found that 93% of homebuyers were able to lower their monthly payments.
"The most powerful tool is having competing offers in hand,” Schulz said. “It's much easier to negotiate when you can tell a lender that another company has offered a lower rate or lower fees.
“Consumers should ask directly whether the lender can match or beat a competing offer, and they shouldn't focus solely on the interest rate. Closing costs, lender fees and discount points can also be negotiable. Most importantly, don't be afraid to ask. The data shows that people who negotiate are overwhelmingly successful."
What to look for in an offer
Mortgage interest rates have been relatively high as of late. However, there are other factors to consider when looking at the final monthly payment.
Schulz encourages consumers to pay close attention to the APR, not just the interest rate.
“The APR incorporates many of the loan's fees and gives a more complete picture of the cost,” he said. “They should also carefully review lender fees, closing costs, discount points, prepayment penalties, and whether the loan has any features that could increase costs later. If something isn't clear in a loan estimate, that's a signal to ask questions. A mortgage is too important and too expensive to sign without fully understanding the details."
Take your time and do your homework
One of the biggest takeaways for consumers: taking a few extra minutes to get numbers from different lenders can make all the difference.
"This study is just further proof of how monumental the savings can be when you take the time to shop around,” Schulz said. “In a time when affordability remains one of the biggest challenges facing homebuyers, that's an opportunity people simply can't afford to ignore. Getting at least three mortgage quotes should be as routine as getting a home inspection. It's one of the smartest financial moves a buyer can make."