The peak season for home sales is in the spring. Many homebuyers are likely to make a serious mistake. According to the Consumer Financial Protection Bureau, almost half of all homebuyers don’t shop around for a mortgage. Consumer Reports has important advice on how to be a savvy homebuyer.
Just a small difference in the mortgage interest rate can make a big difference in your monthly payments. And that really adds up over the years. For instance, with a 30-year mortgage at $155,000, if you get a fixed interest rate of 3.75 percent, you’ll pay $718 per month. If the interest rate is just a half-point higher—4.25 percent—the monthly payment jumps to $763. That’s an increase of $16,000 over the life of the loan.
Consumer Reports says that you need to educate yourself not only on interest rates but also on the types of loans available, closing costs, and other possible fees. A good place to start is on the Consumer Financial Protection Bureau’s website, at consumerfinance.gov.
The next step: Get quotes from several lenders. They can be large banks or mortgage companies. Remember to consider credit unions and small community banks, too. Another place to look: Bankrate.com is a useful website if you want to broaden your search nationally.
A lot of people also consult with mortgage brokers, and that can be helpful. But Consumer Reports advises not to rely solely on those recommendations, as you may not get the full range of options.
Another Consumer Reports recommendation is to take advantage of government-sponsored home-buying counseling services. You can find one in your area by going to the Housing and Urban Development website and searching for Housing Counseling to find services in your area.