How to Compare Mortgage Offers and Loan Estimates

Compare Loan Estimates with matching assumptions

Put both offers next to each other and circle differences in loan amount, down payment, term and rate lock. If one uses a smaller tax estimate, that can make its payment appear lower without making the financing less expensive. Ask each lender to identify which numbers are quotes and which are estimates.

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Compare mortgage points, lender fees and credits

Look at lender charges together with discount points and lender credits. Then look at required outside services. Finally, compare prepaid items and escrow assumptions. Those last items are real cash needs, but different estimates can obscure the price of the loan itself.

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Use a matching time period

Ask what you will have paid and still owe if you keep the loan for two, five or ten years. Include financing costs and any added loan balance. If one option pays off much sooner, a payment comparison alone is incomplete. APR is useful context, but it does not replace your own likely timeline.

A hypothetical offer comparison

Suppose one offer costs $3,000 more upfront and reduces the principal and interest payment by $60 a month, with otherwise matching assumptions. The simple screening calculation is $3,000 divided by $60, or 50 months. Selling or refinancing earlier can change the decision. The screen does not include investment opportunity cost, tax treatment or different remaining balances.

Ask about the experience as well

Price matters. So does understanding who will answer your questions, what has actually been reviewed, what conditions remain and how changes will be communicated. Ask for specific explanations you can verify. A confident sales pitch is not the same as a documented plan.

Where to find the mortgage rate, APR and cash to close

Use the Loan Estimate as a comparison worksheet: page 1 shows loan terms and projected payments; page 2 separates loan costs from other costs and estimates cash to close; page 3 includes comparison measures such as APR. Ask about any rate-lock difference before comparing totals. A smaller escrow estimate does not necessarily mean the lender is charging less.

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