Lower-income borrowers are less likely to shop around for a mortgage quote—or use technology to aid them in the process, according to a study conducted by Fannie Mae.
Moreover, this category of shopper is more likely to have a mortgage broker or real estate agent influence their loan decision (30% and 29%, respectively, compared with 20% for both in the middle-income category and 17% and 14% for the higher-income category).
For the general population, just 38% obtained a single quote when obtaining a loan. This is a slight improvement over the results of a LendingTree survey released this past summer, where nearly half the respondents said they did not shop around for a mortgage.
In both studies, the sponsor (whether it is Fannie Mae or LendingTree) made the same point: that by failing to shop, the consumer is leaving money on the table. For low-income residents only half obtained just one price quote which potentially cost them $1,000 in closings costs, the GSE found.
In a statement, Fannie Mae chief economist Doug Duncan said, “Many borrowers do not fully understand their mortgage products and costs. As a result, some homeowners in this position may find themselves with unsustainable payments down the road.”
Higher-income borrowers are more likely to obtain multiple quotes, saying the competitiveness of the quote determined their decision. For borrowers whose income is north of $100,000, 64% shopped for more than one offer, Fannie said.
While lower-income consumers are more likely to obtain their rate and point quotes in person, higher-income borrowers did so through phone calls or online research.
Lender advertising had the least influence across all three groups, 14% for lower-income, 6% for middle-income and 4% for higher-income consumers.
Furthermore, nearly six in 10 consumers said they did not use any sort of calculator or other tool to assist them in determining what their payment might be. For lower-income borrowers, the percentage is 72%. For loan shoppers between the ages of 35 and 44 the no-calculator ratio is 46%.