How to Compare Mortgage Rates Across Lenders

Compare mortgage rates effectively by looking beyond the advertised rate to APR, fees, and total loan costs.

1. Get rate quotes on the same day. Mortgage rates change daily, so collect all your quotes within 24-48 hours for accurate comparison. Contact 3-5 lenders and ask for a Loan Estimate, which they're required to provide within 3 business days of your application. This standardized form shows your interest rate, APR, and closing costs in the same format.
2. Compare APR, not just interest rate. The annual percentage rate (APR) includes both your interest rate and most loan fees, giving you the true cost of borrowing. A 6.5% rate with $8,000 in fees might have a 6.8% APR, while a 6.6% rate with $3,000 in fees has a 6.7% APR — making the second loan cheaper despite the higher rate.
3. Add up total closing costs. Look at Section B of the Loan Estimate for services you cannot shop for — these are the lender's required fees. Compare origination fees, underwriting fees, and processing charges between lenders. Ignore third-party costs like appraisals and title insurance, since these are roughly the same everywhere.
4. Calculate your break-even point. If one lender offers a lower rate for higher upfront costs, divide the extra fees by your monthly payment savings to find your break-even point. If staying less than that many months, take the higher rate with lower fees. If staying longer, pay the higher upfront cost for the lower rate.
5. Lock your rate in writing. Once you choose a lender, get your rate lock in writing with the exact rate, APR, and lock period (typically 30-60 days). Don't just accept a verbal quote — rates can change before closing, and a written lock protects you from increases during underwriting.