How to Shop for a Mortgage
Getting three honest quotes and reading them correctly can save more than any other hour you spend buying a home. Here's exactly what to compare and how.
The single most valuable hour you’ll spend buying a home is the one where you get three or more written quotes and compare them line by line. Borrowers who gather multiple offers routinely save thousands over the loan, because rates and fees vary more between lenders than most people assume — and the law gives you a standardized form, the Loan Estimate, built specifically to make those offers comparable.
Before you start, see how a rate or fee difference plays out over the loan with the Mortgage Calculator. Then use the steps below to shop like a pro.
Rate vs. APR: read both
The advertised interest rate sets your monthly principal-and-interest payment. The APR (annual percentage rate) folds most of the loan’s upfront costs — points, lender fees, some closing costs — into a single yearly figure, so it reflects the true cost of borrowing.
Neither number alone tells the whole story:
- A loan with a low rate but high fees can carry a higher APR than a loan with a slightly higher rate and no fees.
- APR assumes you keep the loan to term. If you’ll sell or refinance in a few years, a low-fee loan can beat a low-APR-with-points loan, because you never recoup the upfront cost.
Use the APR to compare two loans of the same type and term at a glance, then dig into the fees behind it. Model the trade-off with the APR Mortgage Calculator.
Reading the Loan Estimate
Within three business days of your application, every lender must send a Loan Estimate — a standardized three-page form. Because the format is identical across lenders, you can lay two side by side and compare them box for box. Here’s where to look:
- Page 1 — the headline terms. Loan amount, interest rate, monthly principal and interest, and whether any of these can change. Check the prepayment-penalty and balloon-payment boxes here. The “Estimated Total Monthly Payment” includes taxes and insurance.
- Page 2 — the costs. This is where lenders differ most. The Loan Costs section lists origination charges, points, and services you can and can’t shop for. The Other Costs section covers taxes, prepaid interest, and escrow.
- Page 3 — the comparisons. The “In 5 Years” figure (total paid and principal paid) and the APR. Also the “Total Interest Percentage” — total interest as a share of the loan amount.
The form is built to be compared, so compare it. A lower rate on page 1 means little if page 2 hides $4,000 in extra origination fees.
What to compare across lenders
Don’t compare on rate alone. Pull these lines from each Loan Estimate into one view:
| What to compare | Where on the LE | Why it matters |
|---|---|---|
| Interest rate | Page 1 | Sets your monthly payment |
| APR | Page 3 | True yearly cost including most fees |
| Discount points | Page 2, Loan Costs | Upfront cost to buy down the rate |
| Origination / lender fees | Page 2, Loan Costs | Pure lender markup — most negotiable |
| Lender credits | Page 2 | Money toward closing in exchange for a higher rate |
| Total closing costs | Page 2 | Cash you need at the table |
| Monthly P&I + escrow | Page 1 | The payment you’ll actually live with |
To compare fairly, make sure every quote is for the same loan type, term, and rate-lock period, pulled on or near the same day. Rates move daily, so a quote from Monday and one from Thursday aren’t an apples-to-apples comparison.
Use the 45-day rate-shopping window
You can apply to several lenders without wrecking your credit. Scoring models treat multiple mortgage inquiries within a focused window as a single inquiry, on the assumption that you’re shopping one loan rather than opening several. Depending on the model, that window runs roughly 14 to 45 days.
The practical move: cluster all your applications inside a couple of weeks. The whole batch counts as one hard pull, which typically costs only a few points and fades within months. For more on how inquiries and tiers work, see Credit Scores and Your Mortgage.
Discount points and lender credits
Points and credits are two sides of the same dial — they trade cash today against your rate:
- Discount points are an upfront fee — one point equals 1% of the loan — that lowers your rate. They pay off only if you keep the loan long enough to recoup the cost. Find that break-even with the Mortgage Points Calculator.
- Lender credits are the reverse: the lender covers some closing costs in exchange for a higher rate. They cut your cash-to-close but raise the payment for the life of the loan.
Which way to lean depends on two things: how much cash you have now, and how long you’ll keep the loan. Buying points makes sense when you’ll stay put for many years; taking credits makes sense when cash is tight or you expect to move or refinance soon.
Locking your rate
A rate lock freezes your quoted rate for a set period — often 30, 45, or 60 days — so a market move before closing doesn’t change your deal. Key points:
- Longer locks usually cost slightly more (a higher rate or a small fee). Match the lock length to your realistic closing timeline.
- Ask about a float-down option, which lets you take a lower rate if the market drops before you close.
- Get the lock in writing, with its expiration date. A verbal lock isn’t a lock.
If your closing slips past the lock’s expiration, you may face an extension fee or have to re-lock at current rates — so build in a buffer.
Negotiating fees
Some closing costs are fixed by third parties; others are pure lender markup and very much negotiable. Where to push:
- Origination and lender fees are the most movable. Use a competitor’s lower Loan Estimate as leverage — a lender that wants the deal will often match or beat a rival’s fees.
- Services you can shop for (page 2) — title, settlement, pest inspection — can be sourced yourself for less.
- Junk fees — vague “processing,” “underwriting,” or “document” charges — are worth questioning directly. Some get waived when challenged.
You generally can’t negotiate government recording fees, transfer taxes, or prepaid escrow, since those aren’t the lender’s money. Read Closing Costs Explained to see which line items are which.
Broker vs. bank vs. online lender
Where you shop shapes the offers you’ll see:
| Channel | Strength | Watch for |
|---|---|---|
| Mortgage broker | Shops many lenders for you; useful for tricky files | How they’re compensated; not every lender on their panel |
| Bank / credit union | Relationship perks; in-person service | May offer only its own products |
| Online lender | Fast quotes, often sharp pricing | Service is largely digital; you do the comparing |
There’s no single best channel — the best offer can come from any of them. That’s the whole argument for shopping all three: get a Loan Estimate from a broker, a bank or credit union, and an online lender, then compare them on the form the law already standardized for you.
Where to go next
- Compare two offers’ true cost with the APR Mortgage Calculator.
- Decide whether buying points pays off using the Mortgage Points Calculator.
- Make sure the price fits first with How Much House Can You Afford?.
- Already own? See whether shopping a refinance makes sense, and read When to Refinance.
Frequently asked
Does getting multiple quotes hurt my credit? Only slightly, and only once if you cluster them. Mortgage inquiries inside the rate-shopping window count as a single hard pull, which usually costs a few points and recovers within months.
Is the lowest rate always the best deal? No. A low rate paired with high fees can cost more than a slightly higher rate with no fees, especially if you sell or refinance early. Compare the APR and total closing costs, not just the rate.
How many lenders should I get quotes from? At least three, ideally spanning different channels — a broker, a bank or credit union, and an online lender. More quotes mean more leverage to negotiate.
This guide is general educational information, not financial advice. Confirm specifics with a licensed lender or advisor.