Information is power, but two recent consumer surveys find that homebuyers aren’t evaluating all their options, potentially leaving money on the table.
1. Shop your loan. Nearly half of buyers don’t shop around for their mortgage.
According to a new analysis by the Consumer Financial Protection Bureau (CFPB), 47% never considered more than one lender. The CFPB also debunks the myth that shopping around lenders will hurt your credit score. When multiple credit checks are concentrated over a short period of time, they are typically treated as one inquiry and won’t hurt your credit score, according to the CFPB.
Plus, some mortgage loans have introduced changes. FHA recently announced they are making a rate reduction in its annual mortgage premium, saving 2 million borrowers about $900 a year. Buyers should not only shop lenders, but also compare different loan types to evaluate cash to close, monthly payments and other fees.
2. Research down payment and closing cost programs. 70% of Americans don’t know that down payment programs are available.
A recent NeighborWorks America survey, found that most buyers simply are unaware of programs and therefore aren’t even investigating these programs. NeighborWorks cites two common misconceptions about down payment assistance: that only low-income buyers can qualify for it, and that it isn’t available to first-time homebuyers.
The fact is there are a wide range of programs available in every community across the country—more than 2,200 programs. Buyers should ask their lender or Realtor about program options that can be combined with their first loan. Buyers can also find affordable home loans through their state or local Housing Finance Agencies (HFAs), featuring lower minimum down payment requirements, competitive interest rates, down payment programs and homeownership counseling.
We know it’s exciting to start touring your dream homes, but put these two steps first. When you have your home finance details in order, you’ll know what homes and price points will best fit your situation.