How do I compare mortgage rates from different lenders?

Mortgage rates vary significantly between lenders because each lender has different costs, profit margins, and risk tolerances. The interest rate you are quoted is only part of the picture. The APR gives you a more complete comparison because it includes the interest rate plus points, broker fees, and other credit costs. When you receive a Loan Estimate from each lender, compare the interest rate, APR, total closing costs itemized in Section A (origination charges) and Section B (services you cannot shop for), the monthly payment including principal, interest, taxes, insurance, and PMI, the loan type and term, the rate lock period and whether there is a float-down option, and any prepayment penalties. Also consider the lender's reputation and customer service. The cheapest rate is not always the best if the lender cannot close on time or is difficult to work with. A mortgage broker can shop multiple lenders for you and may save you time and money. Rate shopping is encouraged. Studies show that getting just one additional quote can save borrowers an average of $1,500 over the life of the loan.