Recent research by Zillow Home Loans suggests that only 13% of home buyers purchase a home before applying. In fact, people spend more time researching cars and vacation rentals than they do getting a loan.
This lack of research can cost borrowers thousands of dollars. It’s always important to shop around for the best mortgage deal, and understand how to improve your score before applying. But at a time when the loan rate is the highest, it is more important than ever.
- Recent research by Zillow Home Loans suggests that only 13% of home buyers purchase a home before applying.
- 30% of home buyers in Zillow’s survey said they were worried that applying for a mortgage could negatively affect their score. Basically it won’t
- Paying off existing debt, paying your bills on time, and regularly reviewing your credit report for errors can increase your score, and ultimately lower your credit score.
Home buyers don’t shop around
It’s long been known that home buyers don’t spend much time researching mortgage options, but recent research from Zillow Home Loans has put some numbers on the scale of the problem.
A Zillow survey shows that 72% of home buyers don’t shop around for a loan before applying, and only 13% said they spent at least a month researching lenders. To put that number in perspective, 28% of people said they spent at least a month researching cars before buying one, and 23% said they spent at least that long looking at cars. vacation options. In fact, survey respondents spent as much research time looking for new TVs as they did making purchases.
The primary reason for this lack of research? The concern that applying for multiple loans could hurt your credit score. 30% of home buyers in Zillow’s survey said they were worried that applying for a mortgage could negatively affect their score. Normally it won’t – if a loan pre-approval can affect your credit score, buyers can shop around and submit multiple applications for 45 days with a single credit score. score he got.
Why you should shop around for a loan
The low level of research that most home buyers do before applying for a loan can cost them thousands of dollars. The average mortgage in the United States is now over $400,000, so saving just 1% on your interest rate can mean big savings over the life of your loan.
Libby Cooper, vice president of Zillow Home Loans, notes that getting a mortgage is often the biggest financial decision a person makes. “Taking the time to understand your credit report, correct any issues and consult with a qualified credit professional,” he added, “can make a big difference in the buyer’s experience.” house.”
According to Zillow’s research, however, many people don’t fully understand how credit works. This prevents them from shopping around for a good deal, but it can also mean they pay more than they need to on their mortgage. Another recent Zillow analysis shows that buyers with “fair” credit are likely to pay hundreds more in monthly mortgage payments than those with “good” credit.
Therefore, the best way to negotiate a loan is usually to focus on your credit score first, and then approach the lenders. Different lenders offer different rates, of course, but they usually offer better rates if you have a good credit score. Paying off existing debt, paying your bills on time, and regularly reviewing your credit report for errors can increase your score, and ultimately lower your credit score.