We all know to shop around and check the sales when it comes to buying pricey items like a new car, a big-screen TV, or even a refrigerator with smart features. But many buyers don’t realize they should do the same when it comes to mortgage lenders.
The average home buyer can save nearly $90 a month—or more than $31,000 over the life of a loan—simply by comparing interest rates offered by different companies, according to a recent LendingTree report.
The online financial services marketplace looked at mortgage rates and fees over the life of a 30-year fixed-rate mortgage in the 50 largest U.S. cities to come up with its findings.
“Different lenders will give you both different mortgage rates and fees,” says LendingTree’s Chief Economist Tendayi Kapfidze. “If lenders want to attract a lot of borrowers, they may have a low interest rate to be more competitive. … [So] if you shop around and talk to more lenders, you might find a lender offering a better interest rate.”
Nationally, the median home list price reached a new high of $310,000 in April, according to realtor.com data. That makes every extra dollar count all the more.
Meanwhile, mortgage rates were an average 4.14% on 30-year fixed-rate mortgages as of May 2, according to Freddie Mac. For even 1 additional percentage point, borrowers can be charged tens of thousands of dollars before the loan is paid off.
Where can home buyers save the most money?
Those in the priciest cities can potentially save bundles. Buyers in San Francisco can potentially shave more than $44,000 off their mortgage payments over the length of their loans by shopping around.
And they’ll want to save every dollar they can. The median list price in the city was a whopping $1.35 million, according to realtor.com data.
“The more you borrow, the more you can save by lowering your interest rates,” says Kapfidze.
Other cities seeing the most potential savings were San Diego, where buyers may be able to keep nearly $43,000 in their pockets. It was followed by Denver (more than $42,000), Seattle (more than $41,000), and Albuquerque, NM (just over $40,000).
The big savings aren’t just for people living on the coasts. Even buyers in cheaper parts of the country, such as Oklahoma City, can save about $24,000 by finding a lender offering lower mortgage rates.
“Wherever you are, there’s going to be an opportunity to save,” says Kapfidze.