Of all the major purchases in life, a home purchase in probably the biggest investment a consumer will make. So, it's surprising to find that homebuyers spend more time researching a car than their home loan.
A new survey from Zillow of 2,010 adults conducted online from March 28-29, 2016 by Ipsos showed that Americans spend just 8 hours researching their home loan, typically only obtaining just four quotes from lenders.
In addition, 18 percent of those surveyed spend an hour or less looking for a home online.
On the other hand, consumers spend 11 hours researching buying a car and 8 hours researching a vacation, despite the fact that these items cost just a small fraction of the average cost of a home, Zillow stated. The average home costs five times more than the average car and 80 times more than the average vacation, Zillow said as an example.
"When it comes to spending money on our daily expenses, we all understand the value in taking time to shop around, compare product reviews online, or research retailers to ensure we are making a wise purchase," said Erin Lantz, VP of mortgages for Zillow Group. "Yet surprisingly, very few prospective homebuyers apply that same diligence to choosing a lender and a home loan, despite the fact that is likely the largest purchase they will ever undertake. Unfortunately, that mistake could be costly–a small difference in the interest rate can add tens of thousands of dollars to your mortgage."
Although millennials are faced with high student debt and rents that prevent them for preparing for a home, they do seem to be taking the right approach online when looking for a home. Zillow found that millennials (age 18-34), on average, spend more time than Generation X (age 35-54) or Boomers (age 55 and older) researching or shopping for a mortgage.
In addition, millennials are more likely than other generations to compare rates. The survey showed that 86 percent of 18-34 year-olds shopped around for a loan, compared to 75 percent of 35-54 year olds and 55 percent of those 55 years and older.
The millennial generation reports obtaining more quotes from lenders than older consumers. Millennials obtained six quotes, compared to an average of four quotes by Gen-X shoppers and three quotes by Boomers.
"Getting multiple offers and being able to compare them relative to one another is critical to ensure the borrower has chosen a loan officer who will provide a seamless experience and competitive rates," Zillow said.
Click here to view the full report.