More than a third of 2018 homebuyers say they did not shop around before selecting their mortgage lender, according to Doug Duncan, chief economist of Fannie Mae.
“Although homebuyers who received only one quote didn't usually express regret, most still reported trying to negotiate mortgage terms with somewhat less success than those who did shop around,” Duncan said. “By not shopping around to give themselves leverage when negotiating their mortgage, some homebuyers are leaving money on the table.”
The biggest reason people gave for not shopping around was a pre-existing relationship with a lender, he said.
“Many recent homebuyers who received only one quote reported doing so because they were more comfortable with that particular lender,” Duncan said. “Non-shoppers also reported much less concern with competitive terms when selecting a lender, citing other non-financial priorities, such as customer service/responsiveness and having a preexisting account with a lending institution."
Duncan issued his comments in tandem with the publication of Fannie Mae’s National Housing Survey.
“A mortgage is one of the biggest expenses in a person’s lifetime and shopping for multiple quotes can save borrowers thousands of dollars,” the report said.
About 36% of people who received multiple quotes said they were able to use them to negotiate for a lower interest rate, according to the survey. About 11% said they were able to lower origination fees, and 13% said they got lower points, another type of fee.
The borrowers most likely to obtain multiple quotes were people with high incomes, the report showed. About 43% of people whose income topped $100,000 got multiple quotes, while only 34% of people who earn between $50,000 and $100,000 shopped around for the best terms.
Education also played a role. About 66% of people who reported being college graduates got multiple quotes. That share dropped to 18% for people who had “some college education,” and 11% for borrowers who didn’t go on for additional education after high school.
There were also stark differences when broken out by race. About 72% of white borrowers reported shopping around, while only 10% of Hispanic and 7% of black borrowers got more than one quote. For Asian borrowers, the share dropped to 5%, according to the Fannie Mae report.