I visited four bike shops before I decided on my beloved beach cruiser, which cost me about $300. I compared prices, sizes, colors... Does it come with a bell, I asked? Can you deliver it? So it was surprising for me to learn that Americans don't apply the same scrutiny when it comes to making the biggest purchase of all: a house. According to the Consumer Financial Protection Bureau, a government agency, nearly half of Americans don't even call around to different banks when shopping for a mortgage, and three-fourths only fill out an application with one lender. Richard Cordray, head of the CFPB, suggests that consumers may be either intimidated by the process or "a little distracted because, at the same time, they're picking out a house," he told NPR. But the oversight can be extremely costly: Even a half percent interest can amount to thousands of dollars over the life of the loan.
In an effort to make the process more approachable for homebuyers, the CFPB has just launched a set of online tools that will allow Americans to browse current interest rates, learn about more loan options, prepare for closing, and more. One tool lets consumers explore exactly what a lower (or higher) interest rate will mean for their wallets. For instance, on a $600,000 home in Los Angeles, an interest rate of 4.5 percent can cost $23,261 more over the first five years compared to an interest rate of 3.625 percent. That's a of money that could be put to other things—like, say, decorating your new abode.
Do you own a home, or are you shopping for one? Did you shop around for your mortgage? How many banks did you meet with? Discuss with us in the comments below.