A pair of George Washington University instructors identified the phenomenon as “cognitive resource depletion,” meaning individuals burn out on one activity and devote less time to a subsequent one, in this case, shopping for a home loan after finding a suitable property.
The findings are based on a test using two groups, one that participated in a home-shopping exercise followed by a mortgage shopping exercise, and one that only performed the latter.
Nearly half of those that performed both shopping exercises back-to-back selected higher-risk mortgages, while fewer than 20 percent who didn’t have to perform the home shopping exercise did the same.
While the study does make sense, it’s probably just one of many factors that determine what a borrower will end up with loan-wise.
And once a home is ultimately selected, borrowers typically have to make quick decisions in order to obtain financing in a timely fashion.
Aside from leading to a better choice of mortgage, it can help you avoid any nasty surprises late in the game that could crush your dream of homeownership entirely.