Close to half of American homebuyers don't do the legwork when it comes to finding the best deal on their home, the Consumer Financial Protection Bureau (CFPB) reported Tuesday.
Looking at the shopping behaviors of mortgage borrowers in 2013, the bureau found that 47 percent of buyers don't take the time to shop around and compare lenders, resulting in potentially higher costs. Furthermore, 77 percent end up applying with only one lender or broker rather than filling out multiple applications to see who will offer the best deal.
"Buying a home is a big purchase, but it's just that: a purchase," wrote CFPB economist Sergei Kulaev in a post on the agency's website. "We shop to find the best price for laptops or appliances, but ... almost half of us don't shop around for a mortgage when we buy a home."
The CFPB survey also found that modern borrowers tend to rely on information coming from people with something to sell them, including the 70 percent who said they use lenders and brokers to get "a lot" of their mortgage information.
Thirty percent said they relied heavily on their real estate agent for mortgage information.
"While lenders, brokers, and real estate agents can be informative, they also have a stake in the transaction," Kulaev said. "The report found many fewer, 20 to 41 percent of borrowers, get a lot of their information from outside sources such as websites, financial and housing counselors, or friends, relatives or coworkers."
Those who do shop around for the best rate stand to save thousands of dollars. Over the first five years of their mortgage, a borrower with a 4.0 percent 30-year fixed rate could save up to $3,500 in mortgage payments over one with a 4.5 percent rate, CFPB estimates.
In order to give borrowers more tools to gauge their options, CFPB announced the launch of "Owning a Home," a Web-based set of resources and tools designed to give shoppers more information at every step of the homebuying process.
Those tools include: a guide on different loan options, including mortgage terms and types of products available; interest rate comparisons for similar borrowers; a guide to closing documents; and a final closing checklist.
Introduced nearly a year after the bureau's qualified mortgage (QM) guidelines went into effect, CFPB's new program isn't its first step into borrower education initiatives. In late 2013, the bureau released a final rule on integrated mortgage disclosures, which will go into effect later this year. That rule is part of CFPB's "Know Before You Owe" program, which is intended to make mortgage disclosures and documents easier for consumers to understand.
In prepared remarks to be delivered at the Brookings Institution on Tuesday, CFPB Director Richard Cordray said the Know Before You Owe and Owning a Home programs make it possible "for consumers to have conversations with lenders that are better informed and more productive."
"When consumers actively shop for a mortgage, they will be in a better position to make the best decision they can about what is probably the single largest financial transaction of their lives," Cordray said. "People should walk away from the mortgage process feeling secure that they have made a sound and sustainable decision about their future, and they should be right to feel that way."