Don’t be afraid to shop around for a better mortgage deal

Kenneth R. Harney

WASHINGTON — Surprising numbers of consumers don’t bother to shop for mortgage money, even though they could save tens of thousands of dollars through lower interest payments by doing so.

When the Consumer Financial Protection Bureau surveyed 5,000 recent home purchasers several years ago in the first national study of its type, it found that 47 percent of buyers didn’t even “seriously consider” more than one lender; 77 percent applied only to one.

Researchers also found that rate quote variations among competing lenders for the same prime borrower — with a high credit score, 20 percent down payment, seeking the same mortgage amount — frequently vary by one-half of one percentage point.

On a $200,000, 30-year fixed-rate loan, choosing a lender quoting a 4.5 percent rate, compared with a lender who’ll do the loan at 4 percent, can cost you $3,500 in the first 60 months alone.

New studies suggest that the spread between high and low quotes available to borrowers might be increasing.

Lending Tree, an online network with 342 mortgage companies competing for homebuyers’ business, found that the median spread between annual percentage rate quotes to individual borrowers for each loan request on its platform was six-tenths of a percentage point during the week ending March 11. That was up by more than a tenth of a percentage point from a year ago.

What that means is that you, as a potential applicant, presenting the identical characteristics to each competing lender — same credit score, same loan amount, same everything — would likely see a high-low spread of nearly six-tenths of a percent in quoted annual percentage rates. That spread in the case of a $300,000, 30-year fixed rate mortgage translates into $26,780 over the life of the loan.