First, make sure you are comparing current mortgage rates for the same type of mortgage.Mortgage rates and closing costs can change significantly from one day to another, so ifyou are comparing offers from multiple lenders it must be done on the same day. Forexample, if you are shopping mortgage rates and have a quote for a 30 year fixed at5.75%, only compare it to other 30 year fixed quotes at 5.75%.

Next, compare the total of all points and lender fees for each mortgage (from section 800 to813 on the Good Faith Estimate), that is the price of the mortgage. The lender with thelowest cost has the best mortgage rates.

If you are refinancing, you will also need to review the cost of title insurance, closing/attorney, and appraisal. Some large national companies have negotiatedexcellent rates for these services on your behalf. The company with the lowestcombination of points, fees and third party costs for the same rate and product has thebest mortgage rates.

Things to Watch Out For

Good Faith Estimates are just estimates. Many brokers and lenders will give you a low ball estimate, and then after you have paid for your appraisal, they will inform you that the mortgage rate or closing cost have gone up. Look for lenders that guarantee their closing costs up front.

There is nothing wrong with No/Zero Closing Cost Loans. Just be aware that you will be looking at higher mortgage rates in exchange or if you are refinancing, the closing costs could be included in your principal.

Paying higher points and fees will result in lower mortgage rates. For example, at 7% you may have zero points and fees, while at 6% you may have points and fees of $3000. To get the best mortgage rates, you must estimate how long you will have the mortgage. Also, make sure you are comparing current mortgage rates when doing your comparison.