How to compare mortgage offers

Guidance on evaluating multiple mortgage offers when refinancing or purchasing a home.

Comparing mortgage offers can feel overwhelming, but with the right approach, you can make an informed decision that saves you thousands over the life of your loan. Here are four key steps to effectively compare mortgage offers:

1. Obtain a Loan Estimate (LE)

A Loan Estimate is a legally required three-page document that lenders must send within 3 business days of your application. This document details your interest rate, monthly payment, and all fees associated with the acquisition of the loan.

The Loan Estimate is standardized across all lenders, making it easier to compare offers side by side. Make sure you request and review this document from each lender you're considering.

2. Focus on Specific Line Items

When reviewing your Loan Estimate, pay close attention to two specific lines:

• Line D - This represents your total acquisition costs
• Line J - This shows any credits issued by the lender

The calculation is simple: D minus J reveals the total fees you'll pay for the offered rate. This gives you a clear picture of the true cost of each loan offer.

3. Standardize the Rate

To make accurate comparisons, ensure all lender quotes use the same interest rate percentage. A lower rate typically means higher upfront costs, while a higher rate often comes with lower fees or even credits.

By comparing offers at the same rate, you can see which lender truly offers the better deal in terms of closing costs and fees.

4. Match Comparison Criteria

Verify that all lenders have evaluated your application using the same criteria:

• Credit Score - Ensure each lender pulled the same score or is using comparable scoring
• Estimated Home Value - The appraised value should be consistent across quotes
• Loan Purpose - Whether it's a purchase, rate-term refinance, or cash-out refinance affects pricing

When these variables match, you can trust that your comparison is accurate and meaningful.

The Bottom Line

When comparing multiple mortgage offers, work with lenders who demonstrate genuine client advocacy. A good lender will take the time to explain your options and help you understand the true cost of each offer.

At Clear Mortgage Capital, we believe in transparency and putting our clients first. If you have questions about comparing mortgage offers or want a second opinion on quotes you've received, don't hesitate to reach out.