Homeowners are overpaying thousands on mortgages, analysis finds

(InvestigateTV) — The typical homeowner could be leaving thousands of dollars on the table each year simply by not shopping around for a better mortgage rate, according to a new Bankrate analysis. The gap is being described as a “hidden homeownership tax,” and it affects some families more than others.

Alex Gailey, with Bankrate, said the research found nine in 10 homeowners overpay for their mortgages — not because better deals were unavailable, but because they never looked for them.

“By not comparing rates and fees, that’s costing the typical U.S. home buyer more than $3,300 a year,” Gailey said. “And this is essentially a hidden homeownership tax, and it is affecting Americans’ ability to build wealth. Imagine $3,300 back in your pocket every year that you could be putting towards your retirement, your kid’s tuition, wiping out your credit card debt.”

Gailey said the impact compounds significantly over the life of a loan. Over a 30-year fixed mortgage, the avoidable cost totals more than $78,000.

Gailey recommends getting multiple quotes on the same day to ensure an accurate comparison, factoring in fees so the comparison is apples to apples.

“If you try to talk to multiple lenders on the same day and get at least a strong sense of what your rate would be, what discount points you might have to pay to get that rate, what are the other upfront origination fees and costs that you would incur with that lender,” Gailey said.

Gailey recommends requesting an itemized, line-by-line quote from each lender so buyers know exactly what they are paying for and can identify their “walk-away” rate. Before starting the process, using a mortgage calculator can help buyers determine what rate they should qualify for based on their credit score and down payment.