- Understand the difference between interest rate and APR. The interest rate is the base cost of borrowing. The APR (Annual Percentage Rate) includes the interest rate plus lender fees, points, and other costs expressed as a yearly percentage. When comparing lenders, always compare APRs on the same loan type and term — they give a truer picture of total cost. A lender advertising 6.875% with $3,000 in fees may be more expensive than one advertising 7.0% with $500 in fees, depending on how long you keep the loan.
- Gather quotes on the same day. Mortgage rates change daily — sometimes multiple times in one day based on bond market movements. To make meaningful comparisons, contact all lenders within the same 24-hour window. Use the same loan scenario at each lender: same loan amount, same down payment, same loan term, same property type. Comparing quotes pulled days apart is like comparing gas prices from different weeks.
- Shop at least three to five lenders. Research consistently shows that borrowers who get five or more mortgage quotes save more than those who get only one or two. A 2024 Freddie Mac study found that getting five quotes versus one saved borrowers an average of $6,000 over the loan life. Include a mix of large banks, credit unions, and online mortgage lenders. Each has different fee structures and rate competitiveness.
- Review the Loan Estimate carefully. Within three business days of applying, each lender must provide a standardized Loan Estimate form. This document shows your interest rate, APR, estimated monthly payment, projected closing costs broken into categories, and cash needed to close. Use these forms side by side — the layout is identical across lenders by federal law, making comparison straightforward.
- Compare origination fees and lender credits. Origination fees (sometimes called discount points or origination charges) are fees the lender charges to process your loan. They appear as a percentage of the loan amount on the Loan Estimate. A lender offering negative points (lender credits) will give you cash at closing in exchange for a slightly higher rate. Decide whether paying points upfront makes sense based on your break-even timeline.
- Calculate the break-even on mortgage points. Each discount point costs 1% of the loan amount and typically lowers your rate by about 0.25%. On a $300,000 loan, one point = $3,000 and saves roughly $45/month. Break-even is $3,000 ÷ $45 = 67 months (about 5.5 years). If you plan to stay in the home longer than 5.5 years, paying the point saves money. If you might sell or refinance sooner, it likely does not.
- Ask about rate lock options. Once you select a lender and have an accepted offer, lock your rate. Rate locks typically come in 30-day, 45-day, or 60-day options. Longer locks cost more (often 0.125–0.25% extra). Ask if the lender offers a float-down option — this lets you capture a lower rate if rates drop before closing while remaining protected if they rise.
- Negotiate using competing quotes. Once you have quotes from multiple lenders, use them as leverage. Show Lender A that Lender B is offering a lower rate or fewer fees and ask if they can match or beat it. Many lenders have flexibility — especially on origination fees — when they know they are competing for your business. This step alone can save hundreds to thousands of dollars.
- Check lender reviews and responsiveness. Rate is not everything. A lender with a slightly higher rate who closes on time and communicates clearly may be worth more than the cheapest lender who causes delays and stress. Read reviews on Zillow, Google, and Bankrate. Ask your real estate agent which lenders they trust to close on time.
- Revisit your quote before closing. If market rates have dropped significantly since you locked, ask your lender about a rate renegotiation or check if switching lenders is feasible. In a rapidly falling rate environment, the savings can justify the inconvenience of switching lenders even late in the process — though you must weigh the cost of starting over against the interest savings.
Frequently Asked Questions
How many lenders should I get mortgage quotes from?
Get quotes from at least three lenders, and ideally five or more. Research shows each additional quote increases your chances of finding a significantly lower rate and fees, potentially saving thousands over the loan term.
Does shopping multiple mortgage lenders hurt my credit score?
No, if done within a 14–45 day window. Credit bureaus treat multiple mortgage inquiries in that period as a single inquiry, recognizing that rate shopping is normal and responsible consumer behavior.
Should I compare interest rate or APR when shopping mortgages?
Compare APR for a true apples-to-apples comparison — it includes the interest rate plus lender fees and points. Two loans with the same interest rate but different fees will have different APRs, revealing which is actually cheaper.