Best vs. Worst Mortgage Rates: How Much Are You Overpaying If You Don’t Shop Around?

If you are looking at mortgages and figure that the market must be competitive and that all lenders should offer similar interest rates, then you should check out this Axios article and Tomo Mortgage whitepaper “The Truth about Mortgages” (via Abnormal Returns).

Here’s a chart comparing the best and worst mortgage rates over the past several years. (Best is the 5th percentile, Worst is the 95th percentile.) The gap has been as narrow as 0.5% and as wide as 2%. Right now, the gap is closer to 1%.

This difference between getting a top and bottom rate equates to a difference of ~$300 per month on a 30-year fixed mortgage. $300 a month, every month, for up to 30 years! That’s a potential $3,000+ every year that you’re overpaying just because you didn’t shop around adequately.

I’m not familiar with Tomo, but they do offer some easy rate shopping that includes both their rates and those of competitors. Tomo is only available in certain states.