Homebuyers Leave Thousands on Table by Skipping Mortgage Shopping

The Costly Mistake Most Homebuyers Make

When buying a home, most people spend weeks researching neighborhoods, comparing prices, and negotiating with sellers. Yet when it comes to one of the largest financial decisions they'll ever make—choosing a mortgage— more than two-thirds (69%) of homebuyers submit only one mortgage application , according to recent research from Zillow.

This lack of comparison shopping is costing homebuyers dearly. Research shows that getting just one additional rate quote could save homebuyers an average of $1,500 over the life of the loan, and getting five more quotes saved an average of about $3,000 . With mortgage rates currently hovering above 6%, even small differences can translate into substantial savings.

A 2023 study from Freddie Mac noted that buyers could see a full percentage-point difference among lenders . To put this in perspective, on a $360,000 30-year mortgage with a 6.25% fixed rate, the monthly payment would be $2,216.58, and borrowers would end up paying $437,969 in interest over the life of the loan .

Why Buyers Skip Shopping Around

The reasons homebuyers give for not comparison shopping reveal a mix of misconceptions and practical concerns. The main reason prospective buyers cited for why they skip out on shopping around for a mortgage is the fear that it might hurt their credit score (30%) . Others maintained they were happy with the first lender they contacted (24%) and thought that researching would take too much time and effort (19%) .

However, many of these concerns are unfounded. Multiple mortgage applications don't necessarily hit your credit report as separate inquiries, said Margaret Poe, head of consumer credit education for TransUnion. "For example, if you rate-shop by applying for three different [loans], all three inquiries will appear on your credit report, but the credit-scoring models will only count them as a single inquiry" .

According to the National Survey of Mortgage Originations, most consumers think that "prices are roughly the same" across lenders . This belief couldn't be further from reality, as Bureau research shows that interest rates can vary by more than half of one percent, or 50 basis points in mortgage jargon, for similarly qualified borrowers looking for similar types of mortgage loans .

The Real Cost of Not Shopping

The financial impact of failing to shop around extends far beyond monthly payments. Previous Bureau research suggests that failing to comparison shop for a mortgage costs the average homebuyer approximately $300 per year and many thousands of dollars over the life of the loan—for the average person, the difference between the actual rate they got and the lowest offered mortgage rate available to them amounted to an extra $300 per year. That's $9,000 over a 30-year mortgage .

The savings potential becomes even more significant during periods of higher interest rates. As mortgage rates remain higher than in recent years, homebuyers can potentially save $600-$1,200 annually by applying for mortgages from multiple lenders , according to Freddie Mac research. In high interest months of October and November 2022, borrowers who received two rate quotes could have saved as much as $600 annually, while those who got at least four rate quotes could have saved more than $1,200 annually .

Making Shopping Pay Off

For those who do comparison shop, the effort pays dividends. The newest LendingTree study finds that 45% of homebuyers with a mortgage who shopped around got a lower offer than their first, and among those who compared more than one mortgage offer, 45% say the lowest offer didn't come from their first lender .

The process doesn't have to be overwhelming. Only 13% of prospective buyers said they spent at least a month researching mortgage lenders before applying. By comparison, 28% said they spent the same amount of time researching vehicles they were planning to purchase and 23% said they spent that much time planning their vacation before booking .

As housing affordability remains a challenge for many Americans, taking the time to shop for mortgages represents one of the most effective ways buyers can reduce their long-term housing costs. With technology making it easier than ever to compare offers from multiple lenders, the question isn't whether buyers can afford to shop around—it's whether they can afford not to.