What should I compare besides the mortgage interest rate?
Compare the complete mortgage offer—not just the interest rate. Look at the APR, monthly principal and interest, mortgage insurance, estimated total monthly payment, points, lender fees, lender credits, estimated cash to close, loan term, and whether the rate or payment can change.
Also consider how long you expect to keep the mortgage. Two mortgages can have similar rates and meaningfully different costs.
Interest rate and APR are not the same thing
The rate affects interest on the loan. APR reflects the rate plus certain borrowing costs, but it is still only one comparison measure.
Are you paying extra upfront for the rate?
Discount points are upfront cost; one point equals 1% of the loan amount. Whether points make sense depends partly on how long you keep the mortgage.
Is the lender reducing closing costs for a higher rate?
Lender credits can lower upfront costs in exchange for a potentially higher rate. They are not free money.
What is the lender charging to make the loan?
Separate lender-controlled charges from taxes, government charges, insurance, prepaid expenses and applicable escrow amounts.
Compare the total monthly payment
Include applicable mortgage insurance, taxes, homeowners insurance and escrow—not only principal and interest. Household ownership expenses also matter.
Does the mortgage include mortgage insurance?
Mortgage-insurance structure can materially change upfront and monthly costs.
How much money will you actually need at closing?
Estimated Cash to Close includes more than the down payment.
Are you comparing the same loan term?
A 15-year and 30-year mortgage can have very different monthly payments and total interest.
Can the interest rate change?
For an adjustable-rate mortgage, review the first adjustment, adjustment frequency, index, margin, caps and possible payment changes.
Does the mortgage have features that could change the risk?
Check for a prepayment penalty, balloon payment, increasing payment or rate, and a potentially increasing balance.
What is total interest percentage?
TIP shows scheduled total interest over the full term as a percentage of the amount borrowed. It differs from the rate and APR and depends on scheduled assumptions.
Your timeframe can change which offer costs less
The tradeoff between points and lender credits depends on the period you keep the mortgage. A five-year comparison is a tool, not a rule.
The mortgage terms matter—and so does the lender
Consider clear answers, the match between disclosures and promises, closing timeframe, explanations of changes, and your understanding of the terms.
Ask About the Complete Mortgage Offer
A participating mortgage professional can help you understand the tradeoffs among the rate, APR, points, credits, fees and total payment.
A live connection is an attempt to reach an available participating professional, not a guarantee that someone will answer or that financing will be available.