Consumers today are expert comparison shoppers, always on the hunt for the best deal, but when it comes to their mortgage, borrowers often lock in their first home loan offer. According to a new LendingTree survey of 1,317 homeowners conducted online by Harris Interactive in September, 96 percent of American consumers compare prices when shopping for anything, but nearly 40 percent obtain just one home loan quote. By comparison, when shopping for a home computer, consumers research an average of 3.1 models before making a purchase. This explains why fewer than 3 in 10 (28 percent) borrowers are very confident they received the best possible deal on their current mortgage.
Based on a nationally representative sample of current homeowners who were involved in shopping for their home loan, the study revealed 85 percent of consumers use the web to comparison shop, yet just more than one in five (21 percent) shopped online first for mortgage rates. Additionally, although nearly 40 percent obtain just one home loan quote, more than 9 in 10 borrowers (91 percent) understand interest rates vary between lenders.
"Choosing a mortgage is probably the most important financial decision most of us will ever make, yet many consumers simply take the first offer that comes their way," said Doug Lebda, chairman and chief executive officer of LendingTree. "It's a gamble that leaves many borrowers uncertain they've received the best deal on their mortgage. Our research clearly shows that home buyers and homeowners need help navigating the often complex world of home loan financing. LendingTree strives to simplify the process and instill confidence by offering services like our Best Deal Guarantee, lender ratings and reviews, and the opportunity to compare multiple offers. At the end of the day, 30 years is too long to be in the wrong loan."
Frustration also appears to be at the root of this shopping dilemma. According to the survey, 70 percent of borrowers find shopping for a mortgage frustrating, citing the complexity of the terms (21 percent) and time-intensiveness nature of the process (20 percent).
The survey also reveals:
►Though it is a decision that will affect them for the next 15–30 years, nearly three-quarters (72 percent) of homeowners spent the equivalent of a full working day or less shopping for their home loan. Even more shocking? One in 10 spent the amount of time it takes to brush their teeth.
►Twenty-three percent of homeowners recognize they could save more than $100 a month by reducing their mortgage rate by one percent. According to LendingTree data, consumers can save about $208 per month, by reducing their rate from 5.5 percent to 4.5 percent on a $250,000 loan.
►Women are more than twice as likely as men to say they were not at all involved with shopping for their mortgage or when refinancing (16 percent versus seven percent, respectively).
"By bringing competition to the market, LendingTree gives consumers power over the process. Our goal is to ensure each and every borrower is confident they've received the best possible deal on their mortgage," said Lebda.
Designed to empower consumers by bringing choice and competition to the home loan shopping process, LendingTree helps borrowers navigate the path to owning and refinancing a home by providing multiple loan offers within minutes, all via one simple form. The site offers a variety of tools to ease borrower frustration and instill confidence in the process, including the innovative Look Before You Lock. In just a few quick steps, Look Before You Lock helps homebuyers determine if their current loan offer is a good deal by comparing it to offers received by similar LendingTree customers.
This survey was conducted online within the United States by Harris Interactive on behalf of LendingTree from September 28-30, 2010 among 1,317 homeowners ages 18 and older, of which 659 adults were at least somewhat involved with obtaining their current mortgage. This online survey is not based on a probability sample and therefore no estimate of theoretical sampling error can be calculated.
For more information, visit www.lendingtree.com.