Americans will clip coupons and hunt around for sales, but when it comes to saving money on major financial loans like a mortgage, they tend to go with the first bank they talk to.
Online lender LendingTree found that four out of five Americans consider themselves bargain hunters. Nine out of ten Americans have researched prices online before purchasing an item. Yet, less than 30 percent of consumers look for the best rates when it comes to major financial loans. Roughly 18 percent stated they never looked for better rates or prices on loans.
Comparison shopping for loans offers the greatest opportunity for consumers to realize substantial savings. Know Before You Owe, a Consumer Financial Protection Bureau initiative, has simplified mortgage disclosure forms to make it even easier to compare loan rates, yet most consumers seem to waive their right to shop around for the best deal.
Suggests Andrea Woroch, LendingTree’s consumer savings expert, “Consumers sometimes may be too focused on price and fail to consider the lifetime cost of interest which is really where banks and lenders make their money. Over a thirty-year mortgage, a one percent difference between interest rates can easily translate to thousands of dollars.”
Four in five Americans use comparison shopping websites, yet only 14 percent of these bargain seekers comparison shop for loan products. LendingTree found that about one-third of home owners did not negotiate their interest rate before buying their home.
However interest rates offered to borrowers often vary from lender to lender. In Q3 2015, mortgage shoppers who received offers from at least two lenders through LendingTree experienced an average rate differential of .32 percentage points between the lowest offer and highest offer, a difference of $48.06 per month. Using this information, choosing the lowest offer could save a borrower roughly $17,300 over the life of the loan.
So if you’re one of the 80 percent of Americans who are willing to drive further to save 10 cents on a gallon of gas, think about the length of time you’ll have your mortgage.