I recently spoke with a mortgage loan officer who told me that shopping around for the least expensive home mortgage loan is essentially a waste of time, because (due to regulation) the total cost of the loan will vary very little from lender to lender. Is this true?
I live in the United States. I was recently doing some comparison shopping for a home mortgage loan. During this process, I spoke with several loan officers. My primary goal was to determine the differences in total costs between the various lenders. To be clear, I'm talking here about the costs associated with financing the loan - not with other costs associated with purchasing and maintaining the property. My understanding is that this cost breaks down essentially into two categories: lender fees and interest payments. Other costs, which are not associated with financing and which are not under the control of the mortgage lender, would include property taxes and title fees.
My observation has been that the lenders seem to have a pretty well-defined bottom line, e.g. they'll give you a better interest rate in exchange for a higher origination fee, but ultimately you'll pay a similar amount of money over the lifetime of the loan. By chance, one of the lenders I spoke with made a comment which explicitly backed up this view. They told me that comparison shopping was essentially a waste of time - that regulation enacted since the housing collapse has effectively fixed the cost of obtaining a home mortgage loan. In other words, the total cost of the loan won't depend on the specific mortgage lender being used, but will only depend on other factors, e.g.: the specific house being purchased, the loan amount, the down-payment, and the payment period.
I find it hard to believe that there really couldn't be significant variation between lenders in the cost of the loan, but this loan officer seemed very clear on this point. Were they correct?