Figuring Out Which Lender Is Better

There are some basic steps you can take as a borrower to compare offers from different mortgage lenders. This can help you save thousands of dollars up front and over the life of the loan.

Basic Comparison:

You can compare different mortgage offers by evaluating some basic factors:

loan size
loan rate
closing costs
loan term
time of offer
Loan Size

When comparing offers from different lenders you should make sure you are comparing loans of the same size.

Closing Costs:

Some lenders may quote you different ways - such as with a closing cost and no closing cost options. You can't compare an offer from one lender to another if one offer has no closing costs and another loan does. Most lenders can offer loans either way, and change their rates and closing costs to conform to your requests.

Loan Term:

Lenders may also quote you loans that are for different time periods. You can't compare the terms and rate for a 15 year loan with a 40 year loan. Lenders price these loans differently.

Even similar sounding loans can have different loan terms. For example, a minimum payment option loan may have similar terms, but they will be very different if one lender has a term of 30 years and another lender offers 40 year terms.

The 40 year term will offer substantially lower minimum payment options than a 30 year term, even thought both the loans are called "minimum payment option" loans.

Time of Offer:

Interest rates change each day, and some lenders can change mortgage rates throughout the day. Comparing an offer from one lender made on Tuesday with another lender's offer made on Friday is not helpful to you. One lender might look cheaper than the other only because the day they were quoting the loan interest rates were lower.