A Little Shopping Can Save You a Lot on Your Mortgage

Finding the Right Mortgage, Mortgages
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When looking to buy a home or refinance your mortgage, one simple thing could reduce your monthly payments and save you thousands of dollars in interest — and it’s something that most people fail to do. In fact, it’s so easy, you can start less than one minute after reading this article.

Most borrowers fail to shop mortgage lenders

In a 2015 report, the Consumer Financial Protection Bureau found that 77% of consumers apply to only one lender when seeking a mortgage. The CFPB says failing to shop rates and terms among lenders can add thousands of dollars to your costs, including higher interest rates and payments, and can have a significant effect on how much house you can afford.

Use a mortgage calculator to put the savings to the test

It’s surprising how only a fractional change in an interest rate can save you big money over the long haul. Try it out for yourself. Using a mortgage calculator, put in different interest rates from different kinds of mortgages — vary the length of the loan term, too — and you’ll see what a quarter point lower interest rate, or even a slightly larger down payment, can make.



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How to compare multiple mortgage lenders in seconds

By shopping just three different lenders, borrowers could save more than $3,500 in just the first five years, according to the CFPB’s research, and, in one example, enjoy payments that are nearly $60 less per month.

By using an online mortgage rate tool, you can quickly find competitive lenders, narrowing the field to those with the most favorable interest rates and terms. Then, by applying to several lenders rather than just one, you can compare all-in costs and get your best home loan deal.

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Hal Bundrick is a staff writer at NerdWallet, a personal finance website. Email: hal@nerdwallet.com. Twitter: @halmbundrick

Image via iStock.

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