Study Says Homebuyers Should Do Their Homework When Shopping for a Mortgage

The home-buying experience should involve not only comparing properties, according to Fannie Mae economists, but also mortgage lenders. Writing in the firm’s latest National Housing Survey, they note that two out of three buyers — especially young people and repeat owners — obtain multiple mortgage quotes when shopping for a home loan. First-time home buyers and lower-income borrowers, however, say their choice of lender is more likely to be influenced by referrals from friends, relatives, or co-workers. Referrals from real estate agents or mortgage specialists, meanwhile, hold little sway with experienced home buyers with annual income of $75,000 or more. But nearly a third of first-time buyers, regardless of income, took advice from agents or loan specialists. “As large and infrequent as the mortgage transaction is in most people’s financial lives, borrowers may be leaving money on the table by not shopping around and negotiating for the best terms they can get,” write economists Qiang Cai and Sarah Shahdad. “Encouraging home buyers to seek multiple sources of information, determine the key criteria that are important to them, and ask detailed questions about the basis for a lender recommendation when shopping for a mortgage may help them find a lender that best meets their individual needs.” | Read More