A Big Mistake Mortgage Shoppers Make
About one-third of recent home buyers failed to shop around for a mortgage, saying they were satisfied with the first quote that a lender gave them, according to Fannie Mae's National Housing Survey. But that could be a big mistake.
Researchers found that higher-income, younger-aged, and minority borrowers were the most likely to gather multiple quotes when shopping for a mortgage.
On the other hand, "first-time home buyers and lower-income borrowers are more likely to say that referrals from friends, family, or co-workers had a major influence on their choice of lender," note Sarah Shahdad and Qiang Cai of Fannie Mae's Economic & Strategic Research Group in commentary at Fannie Mae’s website. "Only first-time home buyers are more likely to say that a real estate agent's or mortgage specialist's referral influenced their choice of lender. … These findings suggest that there is an opportunity to help consumers be better informed and improve upon the mortgage shopping process."
Shahdad and Cai urge that consumers be provided with more information about mortgage product choices and that buyers be encouraged to seek multiple sources of information.
"As large and infrequent as the mortgage transaction is in most people’s financial lives, borrowers may be leaving money on the table by not shopping around and negotiating for the best terms they can get," Shahdad and Cai write. "Getting a better deal can help borrowers sustain their mortgage even in the case of unexpected increases in expenses or decreases in income. The level of influence of referrals on today’s first-time and lower-income home buyers suggests that finding a lender who delivers on other dimensions, such as efficiency and customer service, also is a key area of focus for many."
Source: "What Is the Mortgage Shopping Experience of Today’s Homebuyer?" Fannie Mae (April 13, 2015)