Most people assume the biggest cost in homebuying is the house itself—but often it's the mortgage decision that determines how much you'll actually pay over time. Too many buyers accept the first loan offered, not realizing how much money they're giving up.
According to LendingTree, the average buyer loses more than $80,000 over the life of their loan simply by skipping comparison shopping. That’s money that could fund a renovation, a degree, or a retirement cushion.
The good news is that avoiding this expensive mistake requires just one simple strategy: mortgage shopping. Yet surprisingly, research shows that 54% of buyers don't compare mortgage offers at all, essentially leaving thousands of dollars on the table.
What Is Mortgage Shopping?
Mortgage shopping means comparing loan offers from multiple lenders to find the best rates, costs, and terms for your situation. Think of it like buying a car: in most cases, you wouldn't purchase the first vehicle you see without checking with other dealerships. A mortgage deserves even more scrutiny—it's likely the biggest financial commitment of your life.
When you shop, you compare key factors like:
Interest rates
Annual percentage rate (APR)
Closing costs
Loan terms
Lender and loan fees
Because each lender assesses risk differently, has differing costs to originate loans by point of sale, and different demand for your mortgage product at any given moment in time, the same borrower can receive dramatically different offers from different lenders. The average difference in APR between the best and worst offers is nearly 1 full percentage point, which can mean tens of thousands of dollars in savings over time or at the closing table.
When to Start Shopping: Your Mortgage Timeline
Understanding when to begin your mortgage shopping journey is just as important as knowing how to shop. This differs a bit when you’re shopping for a refinance vs a purchase, but the conventional wisdom of shopping early and getting multiple pre-approvals or other informal offers like fee sheets, loan quotes, or closing cost details actually ends up costing you big time. While traditional advice suggests shopping early, many experts now believe the highest leverage point in mortgage shopping is when you have an official offer, called a Loan Estimate, which you get when you’re able to complete a formal mortgage application (TRID) and provide your lender with six vital pieces of information. In the homebuying process, this typically happens right after you go under contract on your new home - your lender will disclose your Loan Estimate, and with that in hand, you can really start to stir up the competition.
Here’s the modern timeline for offer shopping success for homebuyers:
6+ Months Before Buying
Request and review your credit report from all three bureaus.
Dispute any errors and start saving aggressively.
Research loan types (FHA, VA, conventional, USDA) and see what might fit your financial profile.
3 Months Before Buying
Get pre-approved with one trusted lender to understand your budget and buying power.
Gather key documents like pay stubs, tax returns, and bank statements.
During House Hunting
Stay in touch with your pre-approval lender to ensure your letter remains current.
Market conditions shift quickly, so maintain communication and update them as things in your financial life change.
After Offer Acceptance – Your Highest Leverage Moment
This is the sweet spot for mortgage shopping— right after you go under contract and get your Loan Estimate.
Get your firm Loan Estimate from your original lender.
Lock your rate to protect against market changes.
Use modern technology to access thousands of competing lenders simultaneously.
Rather than comparing just 2–3 lenders out of 250,000 loan officers nationwide, smart shoppers wait until they have a firm Loan Estimate, then leverage technology to access broader competition. Modern tools like Fincast allow you to see how your offer stacks up against the wider market without managing multiple applications or sharing personal data repeatedly.
Think of offer shopping as price optimization for your mortgage when you’re at your highest leverage moment… an offer in-hand, ready to close, with lenders racing to beat your deal.
The Real Cost of Not Shopping: Evidence You Can't Ignore
The numbers prove just how valuable mortgage shopping can be. An analysis of more than 80,000 borrowers by LendingTree found that people who compared offers saved an average of $80,024 over a 30-year loan. That’s about $2,667 per year—imagine what you could do with an extra $222 per month?! {Hello Starbucks!}
The savings potential varies dramatically depending on where you buy:
California: Average savings of $118,393
Washington: Average savings of $109,012
Louisiana (lowest): Still an average of $44,586, which means about $124 less every month in payments
To put it into perspective, consider a typical $300,000 mortgage. Accepting a 7.0% rate instead of shopping for a 6.0% rate adds $61,496 in extra interest over the life of the loan. That one percentage point difference works out to an additional $171 every month.
Over decades of payments, those “small” differences compound into life-changing amounts.
Quick Win: Text yourself this simple math: Your loan amount × 0.01 × 30 years. That’s roughly how much a 1% rate difference costs you.
What the Experts Want You to Know
The nation’s leading financial authorities all agree: mortgage shopping is essential.
The Consumer Financial Protection Bureau (CFPB) emphasizes that “getting a preapproval doesn’t commit you to using that lender for your loan.” They recommend obtaining official Loan Estimates and using your highest leverage moment—when you have this firm offer—to ensure maximum competition.
Freddie Mac quantifies the benefits: borrowers save an average of $600 by getting just two additional quotes, and $1,200 or more by obtaining five quotes. Despite this, many buyers still don’t shop around because of misconceptions—like thinking preapprovals lock them in, believing multiple credit checks will damage their score, or simply not knowing they’re allowed to compare. These myths persist in part because some lenders benefit when borrowers don’t explore alternatives.
And as Matt Schulz, LendingTree’s chief credit analyst and author of Ask Questions, Save Money, Make More, puts it bluntly: “If the possibility of saving $100,000 or more over the life of a loan doesn’t motivate you to shop around for a better interest rate deal, I’m not sure anything will.” Those potential savings represent real money that can transform your financial future.
In the end, the experts are clear: mortgage shopping isn’t just a smart step—it’s one of the most effective ways to protect your finances and your future.
Common Mortgage Shopping Mistakes That Cost Thousands
Knowing what to do is only half the battle—understanding what not to do can save you just as much money. Here are five common mistakes that cost borrowers thousands over the life of their loan:
Focusing only on interest rates and ignoring APR
A loan with a low rate but high fees can actually cost more than a slightly higher rate with fewer fees. Always compare the APR, which reflects the true cost of the loan. For example, a 6.5% rate with $8,000 in fees may be more expensive than a 6.75% rate with $2,000 in fees depending on the time you plan to hold the loan.
Shopping too early instead of waiting to maximize your leverage
The old advice of applying with multiple lenders weeks before making an offer actually reduces your negotiating power. Lenders compete more aggressively when they know you have a firm deal and timeline, not when you're casually shopping months in advance–get your Loan Estimate!
Defaulting to your current bank without comparing
Loyalty doesn't always pay. Many buyers assume their existing bank will give them the best deal, but that convenience can come at a cost. Limiting yourself to one option almost guarantees you'll overpay.
Comparing limited options instead of accessing broader competition
Manually shopping with 2–3 lenders when there are hundreds of thousands of loan officers is not only time consuming and frustrating, but also highly ineffective. Modern technology allows you to access competition you never knew existed with only a couple of clicks.
Avoiding these pitfalls ensures you're making true, apples-to-apples comparisons—and gives you the leverage you need to save thousands.
Make Modern Mortgage Shopping the Norm
Now that you know how modern borrowers shop and save thousands on their mortgage, you can too. These simple steps, the timing, and technology empower you to find, access, and choose the best deal for you, on your terms. Warning: you may face pushback from your real estate agent or your initial lender, who don’t want you to shop, but this is your mortgage, and your financial future to protect, so remember, you have a right to shop and save.
Disclaimer: Nothing in this content should be considered financial advice. The examples and data shared are for general information only and may not reflect your personal situation. We do not guarantee the accuracy or completeness of the information provided. Always do your own research and speak with a qualified financial advisor before making any financial decisions.
