Most Homebuyers Don’t Compare Mortgage Lenders — and It’s Costing Them Thousands

For many people, buying a home is the largest financial commitment they will ever make. Yet research shows that a surprising number of homebuyers spend weeks comparing neighborhoods, floor plans, and school districts—only to accept the very first mortgage offer they receive. Financial experts say this single decision can quietly cost buyers tens of thousands of dollars over the life of a loan.

Recent data from Zillow reveals that nearly 69% of homebuyers submit only one mortgage application before choosing a lender. While securing a quick preapproval can feel reassuring in a competitive housing market, stopping there often means leaving significant savings on the table.

At today’s mortgage rates, even a small difference in interest can have a dramatic long-term impact. With average 30-year fixed mortgage rates hovering above 6.2%, the cost of borrowing is already high. Failing to shop around only makes it worse.

Why So Many Buyers Stick With One Lender

Many buyers assume that once they receive a “reasonable” rate, there’s little benefit to continuing the search. Others default to the lender recommended by their real estate agent or the bank they already use, trusting convenience over comparison. While these options may not be bad, experts caution that they are rarely guaranteed to be the most affordable.

Certified financial planner Mike Casey explains that mortgage shopping is one of the most overlooked opportunities for improving a household’s long-term financial outcome. Rates, fees, and loan structures can vary widely between lenders—even when the borrower’s credit profile is identical.

This tendency to stop early is especially costly today, when home prices remain elevated and household budgets are under pressure from rising insurance premiums, utilities, groceries, and healthcare expenses.

Higher Home Prices Make Rate Shopping Even More Critical

The housing market has changed dramatically over the past few years. Although home price growth has cooled in some regions, national prices are still far higher than they were before the pandemic. According to Zillow, the average U.S. home price reached approximately $359,000 in late 2024, up nearly 46% from early 2020.

At the same time, mortgage rates are more than double what many buyers saw during the ultra-low-rate environment of 2020 and 2021. Even though rates have fallen from their 2023 peak near 8%, today’s borrowing costs still significantly amplify the importance of finding the best possible terms.

A study by Freddie Mac found that borrowers can encounter differences of up to one full percentage point between lenders. That variation alone can determine whether a mortgage feels manageable—or financially suffocating.

How a Small Rate Difference Adds Up Over Time

To understand why shopping matters, consider a typical example. On a $360,000, 30-year fixed mortgage with a 6.25% interest rate, the monthly principal and interest payment would be about $2,217. Over the full term of the loan, the borrower would pay nearly $438,000 in interest.

Now compare that with a loan at 5.75%, just half a percentage point lower. The monthly payment drops by roughly $116, and total interest paid over 30 years falls to about $396,000. That’s a savings of more than $41,000—without buying a smaller home or making a larger down payment.

These savings are even more meaningful for buyers who plan to hold onto their homes long-term or who are stretching their budgets to qualify.

Closing Costs Matter Just as Much as Interest Rates

Interest rates are only part of the equation. Closing costs can vary dramatically between lenders and often receive far less attention than they deserve. These costs include lender fees, title insurance, prepaid taxes, appraisal fees, and discount points—each of which can significantly affect the total cost of the loan.

Some lenders offer lower interest rates but compensate with higher upfront fees, while others may charge more in interest but reduce closing costs. Determining which option is better depends on how long the buyer plans to stay in the home.

Financial planners recommend asking lenders to provide side-by-side comparisons showing how much interest and principal would be paid over different time frames, such as five or seven years. This makes it easier to evaluate whether paying points or accepting higher upfront costs actually makes sense.

What About Your Credit Score?

One of the biggest reasons buyers avoid shopping around is fear of damaging their credit score. While it’s true that mortgage applications trigger hard credit inquiries, credit scoring models are designed to accommodate rate shopping.

According to TransUnion, multiple mortgage inquiries made within a short window—typically 14 to 45 days depending on the scoring model—are treated as a single inquiry for scoring purposes. All inquiries may appear on the credit report, but they won’t compound the score impact if submitted within that window.

For buyers concerned about minimizing credit score fluctuations, submitting all mortgage applications within a two-week period is generally the safest approach.

The Bottom Line

Choosing a mortgage without comparison is one of the most expensive financial shortcuts a homebuyer can take. With interest rates still elevated and home prices far higher than just a few years ago, shopping around isn’t optional—it’s essential.

Comparing lenders can uncover lower rates, reduced fees, or more flexible terms that significantly improve affordability over time. The process may take a bit more effort upfront, but the long-term payoff can be life-changing.

For buyers navigating today’s housing market, the smartest move isn’t rushing to accept the first offer—it’s taking the time to make sure the mortgage works for your future, not just your closing date.