Interest rates are at a record low, but many borrowers are still reluctant to shop for the best mortgage loan — a decision that could cost them money.
Looking at data from the November 2012 National Housing Survey, Fannie Mae researchers found that close to half of lower-income mortgage borrowers said they did not obtain more than one quote when signing up for their current mortgage.
Comparatively, three out of four higher-income respondents explored competitive offers and said better deals would definitely have an influence on their decisions.
“Although a home purchase is the largest financial obligation most people will ever make, many borrowers do not fully understand their mortgage products and costs,” said Fannie Mae chief economist Doug Duncan. “As a result, some homeowners in this position may find themselves with unsustainable payments down the road.”
Fannie Mae reported that failing to shop around for a mortgage can end up costing borrowers $1,000 or more in closing costs.
As a housing counselor, it’s my job to educate people on the importance of comparative shopping. I encourage clients to attend first-time homebuyers’ workshops as well as one-on-one pre-purchase and post-purchase counseling.
Education is the best way to avoid paying too much for a mortgage.
By David Stolt, Home Ownership Services Manager