Report: Americans are paying too much for their mortgages

Big spenders

Americans apparently aren’t making the smartest financial decisions when buying their homes. According to a new report, homebuyers are missing out on millions in mortgage savings by not shopping around.

Paying too much

According to the 2018 Home Buyer Report from Nerdwallet, a whopping 50 percent of recent homebuyers didn’t shop around when securing their mortgage.

Shopping for a mortgage: How many mortgage quotes do I need?

In total, Nerdwallet estimates they could have saved $776 million a year by comparing quotes in the mortgage process — or about $400 for every borrower.

“List prices and bidding wars are one thing, but many home buyers are missing out on an often overlooked savings opportunity in home buying: shopping for the lowest interest rate on their mortgage,” Nerdwallet’s Elizabeth Renter said. “Comparing mortgage lenders isn’t difficult, but it does take a little time. You can use a mortgage comparison tool to look at rates side-by-side, and compare how much you’ll save on monthly payments and over the life of your loan.”

Mortgage rate shopping especially effective in these U.S. cities

More misconceptions

The report also found that misconceptions surrounding the home buying and mortgage processes are worsening.

Currently, 62 percent of Americans believe you need at least a 20 percent down payment to buy a home. That’s up from just 44 percent in 2017.

In reality, most current homeowners put down a fraction of that. Nearly a third of homeowners put down 5 percent or less on their current property, while another 16 percent put down 10 percent or less.

“A 20 percent down payment is a nice goal; the more you can put down, the less you have to borrow and pay interest on,” Renter said. “But there are many ways to put less than 20 percent down on a home. When considering your down payment options, remember: A smaller down payment may get you into homeownership sooner, but the more you’re able to squirrel away before buying, the less of a pinch that monthly payment will be.”

Get today’s mortgage rates

Don’t want to miss out on savings on your home buying journey? Then shop around for your mortgage rate today.