In the aftermath of the housing market crash and the global financial crisis lenders and borrowers alike are cautious about the mortgage process. Lenders have severely tightened lending standards as a result of the new regulatory environment and many consumers approach the mortgage process with trepidation and anxiety, thinking they have very little control of the end result, thus rushing through the process with little consideration.
Deciding on a mortgage is likely the most important financial decision consumers will ever make, yet borrowers are more often than not taking the first loan offer that comes their way, failing to fully capitalize on low rates by comparison shopping. Taking a look at only one offer or only one lender could cost you hundreds of dollars per month, thousands in the long run.
A recent LendingTree survey, conducted online by Harris Interactive, revealed that only 50 percent of mortgaged homeowners comparison shopped for their current mortgage. However, nearly 90 percent of those surveyed said they comparison shopped for other household purchases, such as, appliances, electronics and motor vehicles. If you're willing to spend time evaluating different microwaves or vacuum cleaners, maybe your mortgage deserves the same comparison-shopping courtesy?
Without shopping around to find the best loan offer for you, it is very likely you are leaving substantial savings on the table. For instance, in the current environment, mortgage rates often vary by over one percent lender to lender. Chances are the first loan offer is not the most competitive offer available. For example, on a $200,000 mortgage loan, it is possible for mortgage offers to currently range from 3.25 to 4.5 percent. This represents a difference of $143 per month, $1,716 per year, and more than $50,000 over the life of the loan. Said a different way, the average homeowner could save almost $2,000 per year by comparing multiple loan offers and working with lenders to find the best deal.
It is important for borrowers to understand that they have the power to choose which loan and which lender to use. Consumers should realize that it is acceptable to negotiate with lenders and to walk away if you are not fully satisfied. Remember, you're the customer and a mortgage is you're (expensive) transaction. Rushing through the process without comparing loan offers could be a very costly mistake.
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