How To Compare Offers From Multiple Lenders
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 if you are comparing offers from multiple lenders it must be done on the same day. For example, if you are shopping mortgage rates and have a quote for a 30 year fixed at 5.75%, 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. This information can be found at on your Loan Estimate (LE).
If you are refinancing, you will also need to review the cost of title insurance, closing/attorney, and appraisal. Your Loan Estimate (LE) will show a breakdown of those fees. Some large national companies have negotiated excellent rates for these services on your behalf.
What are closing costs?
Closing costs consist of three main groups: third party costs, mortgage taxes & lender fees.
- Third party costs are fees that you or the lender pays on your behalf for you to obtain a mortgage, including appraisal fee, credit report fee, title fee and attorney fee. When home refinancing review these costs carefully as some lenders may have lower costs.
- Mortgage taxes will be exactly the same between all lenders, so they do not have to be reviewed.
- Points and lender fees are essentially what the lender charges to originate your home loan when home refinancing and for a new home loan. Points and fees should be reviewed carefully