How Much Can You Save by Shopping for a Mortgage Rate? State-by-State Analysis

Securing multiple mortgage offers can lead to average lifetime savings of over $76,000, according to a recent analysis of borrower data. For homebuyers facing high interest rates, this strategy is a critical step in making homeownership more affordable. The potential savings exceed $100,000 in several high-cost states, demonstrating that a small difference in your annual percentage rate (APR) can have a massive financial impact over a 30-year loan term.

Why Do Mortgage Rates Vary So Much Between Lenders?

Different lenders use distinct criteria and risk assessment models when evaluating borrowers, leading to significant variations in the interest rates they offer. A senior economist explains that lender standards are not uniform, meaning the same applicant can receive "drastically different rates" from different institutions. This discrepancy is why comparison shopping is so powerful. The analysis, based on data from thousands of users who received multiple offers in 2024, found the national average spread between the highest and lowest rates offered to a single borrower was 0.92 percentage points. On a large loan, even a fraction of a percent translates into tens of thousands of dollars.

Which States Offer the Highest Potential Savings for Mortgage Shoppers?

The lifetime savings from comparing mortgage lenders are not uniform across the United States. The analysis identified five states where average savings over the life of a 30-year loan surpass $100,000:

• California: $131,190
• New Jersey: $127,125
• Hawaii: $115,947
• Washington: $115,026
• Minnesota: $103,555

These substantial savings are often linked to higher average loan amounts and more significant spreads between the rates offered by different lenders. For example, Minnesota had the largest average rate spread at 1.46 percentage points.

What Are the Savings in Other Parts of the Country?

The financial benefit of shopping around extends to every state. Even in states with the lowest calculated savings, borrowers can keep a considerable amount of money. In South Dakota, where potential savings are the lowest nationally, borrowers could still save more than $35,000. Other states with notable rate spreads include Nebraska (1.38 percentage points) and Wisconsin (1.35 percentage points), where borrowers also stand to save significantly. This demonstrates that no matter your location, seeking multiple offers is a financially prudent step.

How Can Homebuyers Effectively Compare Mortgage Offers?

The process of comparison shopping is straightforward but requires diligence. Based on our experience assessment, borrowers should focus on the following steps:

1. Check Your Credit First: Obtain your credit reports and scores before applying. A strong credit profile is your best tool for securing favorable rates.
2. Get Pre-approved with Multiple Lenders: Aim to get official loan estimates from at least three different types of lenders, such as large banks, credit unions, and online lenders, within a focused period (typically 14-45 days) to minimize the impact on your credit score.
3. Compare the Loan Estimate Form: This standardized form clearly outlines the interest rate, estimated monthly payment, closing costs, and the APR, which provides a more complete picture of the loan's cost. Pay close attention to the APR, as it includes the interest rate plus other fees.
4. Negotiate: Use competing offers as leverage to ask a preferred lender if they can match or beat a better offer you've received.

The key takeaway is that investing time in comparing mortgage offers can yield a tremendous return. By proactively seeking multiple quotes, you position yourself to secure the most favorable terms available, directly reducing the long-term cost of one of the most significant financial decisions you will make.