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

WASHINGTON -- It's one of the weirder documented facts about homebuying in America: Surprising numbers of people 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. But for some reason, many go limp when it's time to make a really high dollar purchase -- getting a mortgage to purchase a house, often the biggest expenditure of their lives. CFPB 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. Even 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. Compare that with saving a few bucks filling up on gas. Lending Tree, an online network with 342 mortgage companies competing for homebuyers' business, found that the median spread between annual percentage rate (APR) quotes to individual borrowers for each loan request on its platform was six-tenths of a percentage point during the week ending March 11. (The annual percentage rate measures the cost of the loan when fees are added into the quoted interest rate, thereby giving a more accurate picture of the true cost per year.) Another online platform that allows lenders to make competing offers, Zillow Mortgage, conducted a data analysis exclusively for this column that showed the median high-low APR spread in offers on its network of hundreds of lenders and brokers to be even wider -- just under seven-tenths of one percent on a 30-year fixed loan with 20 percent down. Lending Tree promises you up to five firm offers from competitors but requires you to submit personal identifying information so lenders can evaluate your application. Get active, shop for your mortgage money, and save a bunch when it really counts.