Cutting Through The Noise
How to Compare Mortgage Quotes from Multiple Lenders
Shopping for a mortgage can feel overwhelming. Different lenders highlight different rates, points, and fees, making it hard to know which offer is truly best. The key is cutting through the noise and comparing quotes apples to apples as best as you can.
Here’s a simple guide to make your mortgage comparison easier and more accurate:
1. Gather Complete Loan Estimates
Ask each lender for a Loan Estimate (LE). Make sure you have the full picture: interest rate, points, closing costs, fees, and any lender credits. Without all of these numbers, your comparison won’t be accurate.
2. Normalize Points and Fees
Lenders may offer lower rates in exchange for paying points upfront. To compare fairly, calculate:
Monthly principal and interest (P&I) at each rate
Cost of points upfront
For example, if paying $2,000 in points lowers your monthly P&I by $200, you’d break even in 10 months. If your break-even is longer, like 18–36 months, paying points may be less attractive.
3. Consider Loan Amount Adjustments (for refinances)
If you’re adding points into your loan instead of paying out of pocket, your loan balance increases slightly. Factor this into your calculations to avoid overestimating savings.
4. Compare Total Loan Costs
Use a spreadsheet or online mortgage calculator to see:
Total interest paid over the life of the loan
Monthly payments for each scenario
Break-even points for any upfront costs
This makes it much easier to see which loan truly saves you money in the timeframe that matters to you.
5. Ask Questions
Don’t hesitate to ask lenders for clarification on anything that’s unclear. Some important questions include:
Are there prepayment penalties?
Are all fees included in the Loan Estimate?
How flexible is this rate if I decide to refinance later?
Key Takeaways:
Comparing mortgage quotes from multiple lenders is all about clarity and fairness. By calculating costs consistently and thinking about your personal timeline, you can cut through the noise and choose the best loan for your needs.
Want help comparing multiple lenders’ offers? Get a free consultation with me and make sure your next mortgage decision is an informed one.
