How much money could you lose by not looking for mortgage rates?
Not looking for a home loan could be one of the costliest mistakes you can make.
There are many mortgage lenders who offer home loans. Each of these lenders has their own loan requirements. And each sets their own mortgage interest rates and repayment terms.
Since there is no single standard rate, anyone buying a home or refinancing an existing loan absolutely needs to do a lot of shopping. This is all the more important as a mortgage loan represents a very large sum of money. And that’s paid off over a very long period of time, with almost all loans taking decades to pay off.
While it may seem complicated to get multiple mortgage quotes and take the time to compare them, it’s definitely worth doing because of what it could cost you if you choose not to shop around.
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Mortgage borrowers shouldn’t consider a mortgage without getting quotes from at least three different lenders – and ideally more. This is so important because even a very small difference in interest rate can have a big impact on your savings account.
Suppose, for example, that you take out a conventional loan for $ 300,000 and a mortgage lender offers you one loan at 3.15% and the other at 3.45%. It may not seem like a big difference. In fact, there is only a 0.30% difference between the two options.
But the first loan would have monthly payments of $ 1,289 and cost you $ 164,116 in interest over the life of the loan. And the second would come with a monthly payment of $ 1,339 and total interest charges of $ 181,959 over the life of the loan. You would be required to pay $ 50 per month – or $ 600 per year – more for the second loan option. And over the life of the payment, you would pay $ 17,843 in additional interest.
An extra $ 50 per month is a nice meal out. Or it’s money that can help you maximize your retirement accounts or meet other financial goals. And $ 17,843 might be enough to cover a year of college for your child. You just can’t afford to waste so much money because you haven’t shopped enough to find the most competitive mortgage rate.
The good news is, it’s easier than ever to compare rates and terms to make sure you find the best deal. Most mortgage lenders allow you to get quotes online without affecting your credit score. It only takes a few minutes to provide some basic details about your finances and see what rate is offered to you.
Of course, you need to make sure that you are comparing apples to apples and that you consider interest, fees, and other loan terms when doing your comparison shopping. But when you talk about saving hundreds of dollars a year and thousands of dollars over the life of your mortgage, spending a little time doing these things is well worth it.