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 should 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 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.
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 refinancing, review these costs carefully as some lenders may have lower costs.
- Mortgage taxes will be the same between all lenders.
- Points and lender fees are essentially what the lender charges to originate your home loan.. Points and fees should be reviewed carefully.