This is why you should shop around for your mortgage

Purchasing a house or apartment is a major decision when it comes to your personal finances. Your mortgage is going to eat a huge portion of your monthly income. However, according to Consumer Financial Protection Bureau and Freddie Mac half of borrowers doesn't shop around for mortgage rates when buying a house or refinancing. That means they are leaving some serious money on the table.

Here's some examples why mortgage borrowers should be shopping around for  rates:

  • On a $150.000 loan, a 0,25% difference means $200-250 in savings per year. That's at least $1.000 in five years.
  • On a $300.000 loan, a 0,5% difference means $1.000 in savings per year. That's already $5.000 in five years.

The difference is even bigger if you factor in the whole life of a mortgage. Of course, there are other costs than just the rate that a mortgage lender is charging you, but understanding the compounding impact is crucial.

Sources: The Federal Deposit Insurance Corporation, Freddie Mac and Consumer Financial Protection Bureau

Choosing the best mortgage lender can mean a lot of phone calls, meetings, e-mails, and forms to fill. I suggest you sign up to LendingTree (US), LoanConnect (CAN) or Mortgage Simplicity (UK) and get quotations that you can bring to your favorite mortgage lenders. They're most likely going give you a matching offer or a better one.

After you've got your offers, just compare the loan details and decide which mortgage offer is right for you. I've done a similar thing and got my mortgage rate down 0,3 %. You can put your savings into better use by paying off debt faster, building an emergency fund or investing. It's hard to find any reasons why you shouldn't make the mortgage lenders compete.

To sum things up, it doesn't matter whether you're buying your first home or looking for a new mortgage to replace the original. Shop around and find the best rates and fees. It's like putting money in the bank.

* This blog post contain affiliate links


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