How to Compare Mortgage Offers Using the Loan Estimate
Comparing three or more lenders is one of the easiest ways to save on a mortgage. Here's how to get Loan Estimates you can compare fairly, which lines matter most on each page, how to spot the real cost of an offer and how to use quotes to negotiate.
By Pond.com editors Updated 3 min read
Quick answer
- Get Loan Estimates from at least three lenders, ideally on the same day, for the same loan amount, term and type.
- Lenders must send a Loan Estimate within three business days of your application.
- Compare the rate, points, lender fees (Section A) and the "In 5 Years" total on page 3, not just the rate.
- Several mortgage credit checks within a few weeks count as one inquiry for your credit score.
- Show lenders competing offers and ask them to match or beat them.
Two lenders can offer very different deals on the same mortgage. Comparing just a few can save you thousands of dollars, and the Loan Estimate makes it much easier to compare them fairly.
This article is general information, not financial advice.
Get comparable quotes
- Pick three or more lenders, such as a bank, a credit union and an online lender or mortgage broker.
- Ask for the same loan: the same loan amount, term, type and down payment, and the same number of points, ideally zero.
- Apply within a short window. Credit scoring models count several mortgage checks within a few weeks as one inquiry.
- Get them on the same day if you can, since rates change daily.
A lender must send a Loan Estimate within three business days of receiving your application. It's a standard three-page form, so every lender's looks the same.
What to check on each page
| Page | Look at | Why it matters |
|---|---|---|
| 1 | Loan terms and projected payments | Rate, monthly payment, and whether there's a prepayment penalty or balloon payment |
| 1 | Estimated cash to close | What you'll need to bring to closing |
| 2 | Section A: Origination charges | The lender's own fees and any points; the easiest part to compare and negotiate |
| 2 | Sections B and C | Services like the appraisal and title; you can shop for those in C |
| 2 | Lender credits | Money the lender pays toward costs, often in exchange for a higher rate |
| 3 | In 5 Years | Total you'd pay in five years and how much principal you'd pay off |
| 3 | APR and TIP | APR includes fees; TIP shows total interest as a percentage of the loan |
Sections E to G (taxes, prepaids and escrow) depend mostly on the home and the closing date, not the lender, so don't let them sway your choice.
How to spot the best deal
- Line up Section A across offers. A lower rate with much higher origination charges or points may not be cheaper. See mortgage points explained.
- Use the "In 5 Years" figure if you expect to keep the loan around that long, or work out the costs over your own expected time in the home.
- Check the lock period each quote assumes. A short lock can make a quote look better than it is.
Negotiate
Send your best offer to the other lenders and ask whether they can beat it, either with a lower rate or lower fees. Lenders often have room to move, especially on origination charges.
Lock your rate
Once you've chosen, lock your rate for long enough to close, often 30 to 60 days. Ask how much it costs to extend the lock if closing is delayed, and whether you can get a lower rate if rates fall before closing.
Common questions
At least three, and more if you can. Include different kinds of lenders, such as a big bank, a credit union and an online lender or mortgage broker. Rates and fees on the same loan can vary a lot from one lender to another.
No. A low rate can come with points or high fees. Compare the total cost over the time you expect to keep the loan, which is what the "In 5 Years" figure on page 3 of the Loan Estimate shows.
Some can. Lender fees and transfer taxes generally can't rise unless something changes, like your loan amount or rate lock. Some third-party fees can rise by up to 10% in total, and others, such as prepaid interest and escrow, can change freely.