You drive by a busy corner and you see that several gas stations all charge different prices for the same kind of gas. You're in a rush, so it may not be worth your time to pull into the one with the cheapest gas just to save a few cents a gallon.
But when it comes to mortgages, shopping around for a better rate could save you hundreds or thousands of dollars. At any given time, borrowers must contend with different rates for the same 30-year fixed-rate mortgage.
Our latest Insight found that that borrowers could save an average of $1,500 over the life of the loan by getting one additional rate quote and an average of about $3,000 for five quotes. Yet nearly half of borrowers don't shop for better rates before taking out a mortgage to buy or refinance a home.
In addition to shopping for the best mortgage rates, it is important to compare mortgage terms, and fees (including lender application, processing fees, and other loan origination fees). Research shows that by not shopping around, typical borrowers paid an extra $1,000 in fees to originate their mortgage.
Simply put: It pays to shop for the best mortgage terms. And it also pays to ask questions if you don't understand the loan program features. By talking to more than one mortgage lender—ideally, three or more—you're much more likely to get a better interest rate and save money in both the short and long term. With lower monthly payments and lower fixed fees, the loan will be more affordable and you'll have more money in your pocket. Not a bad return for a few phone calls or clicks on the internet.
Visit My Home by Freddie Mac® to learn about your mortgage options and financing your purchase.
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