Did you know more than one-third of homebuyers don’t shop around for their mortgage? Even though research has shown that “shopping around” with different lenders – and really for anything from kitchen renovations to new cars – can result in significant savings, a third of Americans still don’t, according to data gathered during the past 10 years by Fannie Mae.
“Would one-third of homebuyers only look at one home before buying it? Probably not,” said John Thibaudeau, Fannie Mae’s vice president of single-family real estate asset management. “In fact, qualitative research has shown that homebuyers spend a substantial amount of time looking for a home and negotiating price and repairs, but much less time looking for a lender who can offer the best mortgage quote.”
While shopping for mortgages is much less fun than seeing houses, many borrowers said they didn’t feel the need to look further. They felt comfortable with a lender or “satisfied” with the first mortgage quote they received.
Fannie Mae researchers were skeptical. That “could be interpreted as taking the ‘easy’ path, since it requires less time investment and critical thinking during a process that many people already find complex and stressful,” Rachel Zimmerman, national housing survey lead. “Homebuyers, especially first-time homebuyers, may feel overwhelmed with the complexity of comparing the many components that makeup mortgage costs…Behaviorally, consumers might prefer to make a quick decision and opt to go with their first mortgage quote.”
The mortgaged industry needs “innovation to simplify the process by which consumers can compare mortgage quotes,” the researchers said. We at Total Expert agree, getting more rate quotes could be simpler, but innovation is already on the job. Lenders are investing in technology that enables loan originators, especially those who’ve worked with a borrower before or those in the depositor database of a financial institution, to know who may be in the market and in need of a second opinion.
Independent mortgage lenders can use our calculator to see just how many more borrowers they could help with shopping a rate.
Banks and credit unions also can use this calculator to forecast how many people they could help using the number of contacts in their retail banking database.