A home is often the biggest single purchase that a person makes in his or her lifetime.
The total price range is much larger and can reach well into the millions in some markets.
Considering the size of this expense, it is not surprising to find that as of January 2017, more than 75% of home buyers needed to apply for a mortgage.
That automatically adds tens or even hundreds of thousands to the total price of the home, and the amount of that addition can vary widely based on current mortgage rates.
A 30-year mortgage for $200,000 financed at 4.5%, a rate lower than the historical average, will cost the buyer almost $165,000 over the life of the loan.
That means that the borrower is paying nearly as much in interest as in principal, which is the amount borrowed.
And yet, statistics suggest that almost 50% of borrowers apply for mortgages without shopping around for rates.
This statistic is even more surprising when we consider how much research people tend to do when buying everyday items like cooking pots or printers.
Shopping the Consumer Product Market
Studies show that 94% of people who shop online take the time to find the lowest price for an ordinary item, and more than 50% visit more than 4 websites before making a purchase.
The highest percentage of comparison shoppers spend more than 30 minutes on price comparison, and the products in question don't reach four-figure or sometimes even three-figure prices.
Imagine that buyer is comparison shopping for the lowest-priced washing machine.
The best price for a particular type of washer turns out to be $300 for a base model, as compared to $450 from another vendor.
The person would stand to save $150.
Nice, but nowhere near what comparison shopping for mortgage rates could do.
Comparison Shopping for Mortgage Rates
Let's go back to the home loan borrower we mentioned earlier.
If he or she had shopped around for mortgage rates and found a loan at 4%, just 0.5% lower than the rate initially quoted, that borrower would save close to $60 per month.
Savings would increase to approximately $3,500 over the first five years and $21,600 over the life of the loan.
This means, of course, that the savvy comparison shopper has saved an amount that is more than 10% of the total loan principal.
It may also be the cost of a new family car, a chunk of a child's college tuition, or a few nice vacations.
To save that amount, why wouldn't you put in at least the same amount of time as you would invest in a much smaller purchase?
The fact is that washing machines and kitchen utensils are easier to comparison shop than mortgage rates.
Most lenders don't publish their rates online because they know that once a borrower fills out an application, he or she will likely follow through with that lender.
In fact, a CFPB Report revealed only 25% of potential borrowers fill out applications with more than one financial institution.
This means that three-quarters of shoppers are not encouraging lenders to compete for their business.
Chances are, they feel as though they have made a commitment as soon as they start the time-intensive process of applying.
We at Get A Rate believe that borrowers deserve to know what they're getting themselves into.
We offer fully transparent mortgage rates via a digital pricing portal, which allows visitors to enter a few pieces of key information and receive a list of rate options.
We also publish clear explanations of available types of mortgage loans, including standard 30-year and 15-year fixed mortgage as well as adjustable rate mortgages, reverse mortgages, and federally subsidized loan programs.
All of this is available to any Get A Rate website visitor, and it never requires having to fill out an application or speak to a Home Loan Expert.
There is no commitment involved whatsoever – just clearly presented information geared toward today's home buyer. If you are considering a mortgage, start shopping today.