Short Answer
Compare mortgage offers using the Annual Percentage Rate (APR), not just the interest rate. The APR includes the interest rate plus lender fees, points, and other costs, giving you a true apples-to-apples comparison. Also compare the loan estimate forms side by side, looking at closing costs, interest rate, monthly payment, and any prepayment penalties. Get quotes from at least three lenders within a short window to minimize credit score impact.
Shopping for a mortgage can save you thousands of dollars, but you need to compare the right numbers. The interest rate is important, but the APR gives you a more complete picture because it includes the cost of points, origination fees, and other lender charges. When you receive a Loan Estimate from each lender, compare the following: the interest rate and APR, the total closing costs, the monthly payment including taxes and insurance, the interest rate type (fixed or adjustable), and any prepayment penalties. Ask each lender for the same loan type, down payment, and lock period so you are comparing similar products. Rate shopping is considered a single inquiry by credit scoring models if done within a 14 to 45 day window, so your credit score will not be damaged by getting multiple quotes. Consider working with a mortgage broker who can shop multiple lenders for you.
Bob's Advice
Redfin Senior Agent · AI Certified Agent
I have seen buyers save tens of thousands of dollars by shopping around for a mortgage. Do not settle for the first lender you talk to. Get three to five quotes and compare them carefully. I work with several trusted lenders in South Jersey and can give you referrals to people who are transparent about rates and fees. A good lender will take the time to explain the Loan Estimate and answer your questions. If a lender is pushy or vague, move on to the next one.
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