47% of Home Buyers Do Not Compare Mortgage Rates

Almost half of all borrowers only consider one lender or broker before deciding where to apply for a mortgage loan.

Financing the purchase of a home is the most expensive loan you will ever enter into. Yet many borrowers take more time comparing the price of a TV then the multi-thousand loan to buy their new home.

Consumer Financial Protection Bureau “CFPB” is taking steps to help fix the mortgage market.   According to a recent CFPB study, “almost half of all borrowers seriously consider only a single lender or broker before deciding where to apply.” This article has some very valuable tools for mortgage loans: Guide to loan options, comparison of interest rates, guide to closing documents and closing checklist.

Consumer should compare interest rates between multiple lenders or brokers.

The behind the scenes reason for this increased scrutiny is that the bankruptcy trustees and their attorneys are hungry. Bankruptcies are down, but their firm and life style were built on earning a very healthy income. Now they are desperate to keep up that same level of income.

Former CFPB Director Richard  Cordray indicated that the rate calculator will offer more realistic rates for consumers for at least three reasons.  First, the calculator draws from mortgage lenders’ own internal rate sheets so consumers will have access to the same information that lenders have about the consumers.  Second, it allows consumers to input a larger number of variables, including their credit scores, than other calculators.  Finally, the CFPB’s information is offered free from any agenda other than protecting consumers when they make mortgage decisions.

Consumer should compare interest rates between multiple lenders or brokers.

The article cites the following example: “For example, our research showed that a borrower taking out a 30-year fixed rate conventional loan could get rates that vary by more than half a percent. Getting an interest rate of 4.0% instead of 4.5% translates into approximately $60 savings per month. Over the first five years, you would save about $3,500 in mortgage payments.

In addition, the lower interest rate means that you’d pay off an additional $1,400 in principal in the first five years, even while making lower payments.”

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MUSINGS FROM DIANE:

Why would you spend more time comparison shopping for a cell phone then shopping for a 30 year mortgage?  Tell your realtor that you insist on shopping around for the best loan possible and never assume your lender or realtor is looking out for your best interests.

If you don’t stand up for yourself and be pro-active it will cost you thousands of dollars.  It may also result in a house you cannot afford and will eventually go into foreclosure.