It is officially spring, and spring homebuying season is getting into full swing. It's important to shop around for the right home, but it's equally important to shop around for the right mortgage. In fact, shopping for a better mortgage rate could save you hundreds or thousands of dollars. Our research reveals that comparing multiple loan offers can save you serious money over the life of the loan: $1,500 from just one additional rate quote and an average of about $3,000 for five quotes.
Yet, nearly half of consumers don't shop for better rates before taking out a mortgage. In fact, if buyers had compared mortgages from five lenders before they applied, savings would total about $776 million in a year. While it can be tempting to accept your first offer, talking to just one more lender may keep some of your hard-earned money in your pocket.
How can you secure a good rate?
First, you'll want to determine which type of mortgage is best for you. There are two main types of mortgages – fixed-rate and adjustable-rate – that have their own set of features and benefits that need to be carefully considered.
Once you decide which mortgage product is best for you, it's time to shop, compare, and ask questions. It is recommended that you visit three to five lenders and discuss your mortgage options.
It's important to compare all loan offers apples-to-apples so be sure to review your Loan Estimates carefully. If you don't understand some of the loan features, ask! The more you understand, the better prepared you will be to decide which loan is best for you. After you have worked with your lender to determine the best mortgage, lock your rate to help ensure your interest rate won't change between the rate lock and closing.
You may get your best rate from your first lender—but the more you shop around, the more information you will gain, and ultimately you can be more confident with your decision. A home is one of the biggest investments you'll make in your lifetime, it will pay off if you research your options.
For more information on buying a home, visit My Home by Freddie Mac®.