While the present mortgage rates might seem elevated by today’s norms, purchasing a home is notably pricier than it was at the peak of the pandemic. Even if the initial lender you approach provides a satisfactory loan rate, it’s wise to explore other options for a more favorable mortgage rate. Currently, engaging in this exploration could result in potential savings of up to $84,000.
Based on a recent research report from LendingTree, aimed at demonstrating the potential savings for those who explore various options, LendingTree examined information from individuals who used our online shopping platform and received three or more mortgage offers from lenders. Utilizing this dataset, we determined the potential cost reductions for borrowers in each of the top 50 metropolitan areas across the country. This estimation considered the difference between choosing the lowest APR available and selecting the highest.
Through this analysis, we discovered that engaging in mortgage comparison could potentially lead borrowers in the largest metropolitan areas of the country to save an average of $84,301 over the duration of their loan agreements.
Notable discoveries underscored by LendingTree encompassed:
- In the 50 largest metros, borrowers could save about $84,301 on their loan lifetime by shopping around for a mortgage. That’s an average of $2,810 per year or $234 per month.
- San Jose, San Francisco, and Los Angeles lead in potential savings for borrowers. Together, these areas offer an average of $149,146 in lifetime mortgage savings through comparison shopping.
- In the top 50 metros, the difference between the highest and lowest APR is 99 basis points. Even a 0.99% lower rate could save thousands on a loan’s lifetime. A mere 10 basis points lower APR could significantly reduce a mortgage’s overall cost, especially for large loans spanning hundreds of thousands of dollars.
- In Minneapolis, Milwaukee, and Columbus, borrowers face a 117 basis points difference in APRs—18 points higher than the average of 50 metros. Yet, their lower average mortgage amounts mean these areas don’t yield the highest savings compared to cities like San Jose or San Francisco.
- More offers lead to more savings. Nationally, with only two offers, borrowers save about $35,377 over their loan term. In contrast, having over five offers could yield $105,912 in average savings, owing to higher credit scores for lower APRs and larger mortgages.