The FINANCIAL — A home purchase is one of the largest investments most people make in their lifetime, yet on average, Americans spend just 8 hours researching their home loan, and obtain just four quotes from lenders, according to a new survey by Zillow.
One in five (18 percent) of those surveyed spend an hour or less shopping for their home loan. More time is spent researching a car purchase (11 hours) and an equal amount of time researching a vacation (8 hours), despite the fact that these items cost just a small fraction of the average cost of a home. For example, the average home costs five times more than the average cariii and 80 times more than the average vacation.
“When it comes to spending money on our daily expenses, we all understand the value in taking time to shop around, compare product reviews online, or research retailers to ensure we are making a wise purchase,” said Erin Lantz, vice president of mortgages for Zillow Group. “Yet surprisingly, very few prospective homebuyers apply that same diligence to choosing a lender and a home loan, despite the fact that is likely the largest purchase they will ever undertake. Unfortunately, that mistake could be costly – a small difference in the interest rate can add tens of thousands of dollars to your mortgage.”
Millennials, who face obstacles such as student debt and high rents that can impact their ability to save for a down payment, are approaching the home buying process wisely. According to this survey, Millennials (age 18-34), on average, spend more time than Generation X (age 35-54) or Boomers (age 55 and older) researching or shopping for a mortgage. Millennials are also more likely than older adults to shop around for a mortgage and compare apples-to-apples rates: 86 percent of 18-34 year-olds shopped around for a loan versus 75 percent of 35-54 year olds and 55 percent of those 55 years and older.
Across most types of homes loans, the millennial generation reports obtaining more quotes from lenders than do their older counterparts – on average, Millennials obtained six quotes, versus an average of four quotes by Gen X shoppers and three quotes by Boomers. Getting multiple offers and being able to compare them relative to one another is critical to ensure the borrower has chosen a loan officer who will provide a seamless experience and competitive rates. For example, current mortgage rates on Zillow show that a borrower taking out a 30-year fixed rate conventional loan could get rates that vary by more than half a percent, based on varying offerings and services from lenders. This difference could save the buyer of a $300,000 home more than $26,000; in San Francisco, where the median home price is $792,600, the savings could be more than $43,000.
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