PHILADELPHIA (KYW Newsradio) — Homeowners in Philadelphia were found to be overpaying their mortgages to the tune of thousands of dollars per year. New research shows homeowners are not shopping around for the best interest rate, and it’s costing them.
According to a Bankrate survey, between 83% and 88% of people who live in the largest U.S. metropolitan areas, including greater Philadelphia, could have avoided paying thousands of dollars per year if they met with more than one mortgage lender.
The study looked at mortgage loans issued over the last few years and compared them to the average at the time. It found 86% of mortgages examined in Philadelphia were overpaying by an average of $4,425 per year, which equates to more than $80,000 over the span of the mortgage agreement.
Across the country, homeowners were overpaying an average of $3,343 per year.
Homeowners in Los Angeles were found to shell out the most, with 83% of borrowers overpaying an average of $8,139 per year.
Bankrate analyst Jeff Ostrowski said one reason is the cumbersome number of tasks needed to secure a home purchase.
“Once I get one offer, I’m good to go. I’m not really thinking about the mortgage anymore,” he said of buyers.
If a homeowner suspects they are overpaying, Ostrowski said refinancing is not a great option either, because of the costs that go into it.
“Probably have to get another appraisal. You’ll have to get title insurance again. You’ll have to pay closing costs again. So they’re just a number of costs that go into a refi,” he said. “It’s just not smart to do a refi unless you’re knocking a point or more off your rate.”
Ostrowski urged people in the housing market to meet with several banks instead of going with just one that was recommended by your realtor.
Bankrate says 83% to 88% of homeowners are paying thousands of dollars more than they should
Bankrate says 83% to 88% of homeowners are paying thousands of dollars more than they should
