Does it make more sense to bargain hunt for cheap groceries or for a cheap car?
Getting deals on the little things can be worthwhile, but when it comes to the big things, (your mortgage/rent, car, or credit card) it’s crucial.
Does it make more sense to bargain hunt for cheap groceries or for a cheap car? Should you obsess about finding the cheapest contact lens delivery service or should you hunt for the credit card with the lowest rate? Finding the best price on the little things can be worthwhile but when you’re making a big purchase, like buying a house, it’s crucial. And yet 77% of Americans only apply to a single lender when looking for a mortgage.
But guess what? You have options. You can bargain hunt for the things that really matter, like the best interest rate on your mortgage.
If you’re in the market to buy a house, a great place to start your search for the best mortgage rates is the Consumer Financial Protection Bureau. It lists all the different interest rates lenders are offering in your state. It also outlines the costs in extra interest payments between the different rates. These are real rates from real lenders. You can also play around with the size and the type of mortgage (fixed vs. variable). This tool allows you to see in real time and real dollars how much a difference of even half a percent can make. For any given person, the spread between interest rates on mortgages offered by different banks can be as great as 50 basis points (half a percent).
If half of a percent doesn’t seem like much, over a 30 year, $200,000 mortgage, this can add up to $23,000 in extra interest payments.
That $23,000 could go in to your retirement fund, or toward your dream vacation, or toward a college fund for kids down the line. So don’t obsess about bargain shopping for the little things. Putting effort into the big ticket items will be far more valuable financially in the long run. When it comes to the biggest purchase of them all, your home, you could save yourself a ton over the long run by taking the time to shop around for a low-interest mortgage. It’s a no-brainer.