How to Compare Mortgage Lenders Properly
The lowest advertised rate rarely tells the full story once fees and points are factored in.
Compare Loan Estimates side by side, not just the quoted rate
Federal law requires lenders to give you a standardized Loan Estimate. Comparing these directly is the only reliable way to compare true cost across lenders.
Rate isn't the whole picture
Two lenders quoting the same interest rate can have very different closing costs, origination fees, and discount points. The Loan Estimate document, standardized by federal regulation, lets you compare these line by line across lenders — always request one from each lender you're seriously considering.
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Shopping within a short window
Multiple mortgage inquiries within a focused shopping window (typically 14–45 days depending on the credit scoring model) are generally counted as a single inquiry for credit scoring purposes. That means shopping multiple lenders in a short period doesn't meaningfully hurt your score the way scattered applications would.
Points and rate buydowns
Paying discount points up front lowers your rate for the life of the loan. Whether that trade is worth it depends on how long you plan to stay in the home — the longer you'll hold the mortgage, the more a rate buydown tends to pay off.
| Loan Estimate line | What to compare |
|---|---|
| Interest rate | The base cost of borrowing |
| Origination charges | Lender's fee for processing the loan |
| Points | Optional upfront cost to lower your rate |
| Total closing costs | Everything due at signing |
| APR | Rate + fees expressed as one annualized number |