How much can you save by shopping for a mortgage?

While inflation has cooled substantially from its peak of 9.2% in mid-2022, at 3.3%, the latest inflation rate remains above the Federal Reserve's 2% target rate. In turn, the Fed decided at its June meeting to keep rates locked at a 23-year high. As a result, today's mortgage rates remain elevated at just below 7% on average, which is significantly higher than the 2% to 3% rates many buyers locked in during the pandemic. 

Given today's elevated rate environment, some potential homebuyers have decided to wait to purchase a home, as higher rates generally mean higher monthly payments and interest charges. It's important to remember, though, that interest rates and fees typically vary by lender, which means shopping around could save you money, even in today's comparatively high interest rate environment.  

But how much can you save by shopping around for a mortgage — and what strategies can you use that might yield the biggest savings? Here's what to know.

Find out how affordable the right mortgage loan could be for you today.

How much can you save by shopping for a mortgage?

Shopping around for a mortgage is one strategy that might help you get a mortgage rate under 7%. The rate you receive, though, and how much you could save on a mortgage typically depends on your unique financial circumstances. 

For example, the amount you can save by shopping around depends on the mortgage loan and your credit score, according to Erin Sykes, chief economist, real estate advisor and real estate agent at Nest Seekers International. In general, though, it's possible to save from 0.50% to 1%, Sykes says.

While that might not sound like substantial savings, it could add up to tens of thousands of dollars in savings over the life of a mortgage.

Let's say, for example, that you're looking for a $300,000, 30-year mortgage and one lender offers you 7% while another offers you a rate of 7.5%. If you borrowed with the 7% mortgage rate, you would save more than $32,962 in interest over the life of the loan. In addition, your mortgage payment would be about $91 cheaper each month.

You could also save money by shopping around for a 15-year mortgage. For example, if you secure a $300,000, 15-year mortgage at 6% from one lender versus the same loan with a rate of 6.5% from another one, you could save $13,244 in interest over the life of the loan. Your monthly mortgage payment would also be $74 cheaper.

Note, though, that the examples outlined above only take into account the cost of a mortgage. Other fees can affect the cost of your loan too, though, such as property taxes and home insurance, which vary depending on where you live. In turn, it's important to take those into account as you comparison shop as well. 

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How to save by shopping for a mortgage

Here are some strategies that could lead to big savings while shopping for a mortgage, according to experts.

Get quotes from multiple lenders

To get the best deal on a mortgage for your situation, get quotes and compare rates and fees from at least three lenders.

According to Bill Kowalczuk, real estate broker at Coldwell Banker Warburg, a real estate firm based in New York, it typically makes sense to get a quote from the financial institution you bank with, a local lender and another reputable financial institution.

Ask a lender if it matches offers

Asking a lender if it can match or do better than a current offer is another strategy that could help you save money on a mortgage loan.

"As long as you get something in writing from a lender, you can always use it to try and get a better deal with another lender," says Kowalczuk.

Consider using a real estate broker

Working with a real estate broker could also help you secure a more favorable mortgage rate.

"The adoption of technology in the mortgage space over the last few years has made it much easier for mortgage brokers to reduce costs while maintaining the ability to shop around for the consumer for the best possible," says Josh Jampedro, mortgage expert at real Home Loan Advisors.

Is now a good time to purchase a home?

While you may be waiting for rates to drop before buying, some experts say that buying a home now instead of waiting could mean getting it for a lower purchasing price. And, that's especially true if mortgage rates fall, which would, in turn, likely cause an increased demand for homes.

"One benefit of a buyer looking now is less competition," says Lindsey Harn, a real estate agent at Christie's International Real Estate. 

As a result, Harn thinks it's possible that today's mortgage rates could result in getting a better price or terms on a mortgage loan compared to waiting for mortgage rates to drop by a percent or two, thereby increasing the competition in the housing market.

The bottom line

Shopping around for a mortgage is one of the smartest moves you can make this June (or any other month). After all, comparing rates from at least three lenders could lead to a lower rate — and, in turn, thousands of dollars in savings over the life of the loan. That said, how much you might save on a mortgage loan by shopping around depends on other factors as well, like your credit score and down payment amount. So, be sure to be proactive and take steps to prepare for borrowing money for a home, which could help you secure a more favorable mortgage rate.