LOS ANGELES — The latest frenzy of mortgage refinancings has benefited millions of Americans who have been responsible or lucky enough to qualify for 30-year fixed-rate home loans below 4 percent.
Home-lending professionals have some bad news, though, for many of these homeowners: They could have done much better had they shopped for the best rate instead of grabbing the first refi pitched to them.
Quoted rates can vary by more than a percentage point for the same customer seeking a 30-year fixed loan, according to LendingTree. The online mortgage-shopping service provides information about potential borrowers to lenders who then can bid for the business.
A consumer with a credit score of 759 and a loan amount of $260,000, for example, might have received quotes from lenders in early August ranging from 3.25 percent to 4.625 percent.
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By choosing the lowest rate, the borrower would save $214 a month, $2,568 a year and nearly $74,000 over the life of the loan.
Yet a recent Harris Interactive survey of 1,380 homeowners, conducted for LendingTree, found that 9 in 10 American adults compared prices when shopping for big purchases. But fewer than half of homeowners shopped around to refinance their current mortgages.
LendingTree Chief Executive Doug Lebda advised borrowers to negotiate with lenders and be prepared to walk away if a deal seems lackluster — even though the mortgage process can seem impossibly daunting and complex.
“Consumers need to be engaged,” Lebda said. “A lot of them are just happy to have it over with rather than hang in there to get the best deal.”
Jeff Blyskal, a senior editor at Consumer Reports, advised borrowers to talk to several banks, savings and loans and credit unions to gauge available rates and terms. “Our whole thing is shop everywhere you can,” he said.
He said borrowers should then consider consulting a mortgage broker who has access to multiple lenders, perhaps consulting the National Association of Mortgage Brokers to find a certified professional.
Don’t rule out small local banks, some of which are eager to make mortgage loans, Blyskal said.
“They may get to know you better, so you’re not just a number and a credit score,” he said. “You may fit what they’re looking for.”
Lending standards remain tight as a drum and pose challenges for all but the most rock-solid borrowers, he said.
What customers leave on the table enhances the profits of lenders, who have enjoyed soaring revenue and profits since the typical 30-year fixed mortgage rate dipped below 4 percent last fall and then trended downward to the 3.5 percent range this summer.