Americans Vet Cars Longer Than Mortgages

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The average new car may cost about $20,000, while the average new home may cost more than 10 times that amount. But guess which one Americans spend more time thinking about? That’s the topic of a new study out by Zillow.com and its results are something of a shock.

Actually, perhaps the biggest shock is that the news from Zillow isn’t exactly a surprise. The real estate Web site has been tracking consumer preferences on big-ticket items for a few years now, and that data hasn’t changed that much.

In its most recent study — called the Zillow Mortgage Marketplace survey — of 2,729 U.S. adults, Zillow reports “the impact of the widely publicized mortgage meltdown appears to have caused little change in borrower behavior during the past two years.”

“Borrowers report they are spending no more time researching a home loan today than they did in 2008 and those who obtained a loan in the past five years are soliciting fewer quotes — an average of three quotes versus four in 2008.”

Despite the enormity of a new home purchase, which can take six months to a year and leave you responsible for hundreds of thousands of dollars in mortgage loans, Zillow says that borrowers in the past five years spent an average of only five hours researching their home purchase, and about 31% spent two hours or less on their new home mortgage research.

Zillow notes that by research, they mean the options related to home loans and not to the physical task of getting out the door and looking at new homes. The company also notes that, at 20% to 30% for the “two-hour” types, mortgage or home loan searches are equivalent to researching vacations or buying a new television.

As Zillow’s chief economist Stan Humphries points out, “mortgages continue to be something that most people don't want to spend time thinking about” — even as the stakes in buying a new home are higher than ever, thanks to the Great Recession.

But they do so at their own peril, from a financial point of view. Says Humphries; “People spend countless hours shopping for the perfect home, yet few realize that small differences in the interest rate or discount points can add tens of thousands of dollars to the overall cost of the home.” He estimates that even the savings of a half-a-point on a $300,000 can save a consumer $26,000 over the life of the loan.

$26,000 represents both a new car and a few nice vacations. You’d think that consumers would focus on the mortgage first, and use the savings on the less important stuff.

But the Zillow study says otherwise.

—For the best rates on loans, bank accounts and credit cards, enter your ZIP code at BankingMyWay.com.

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