Compare Mortgage Rates and Costs in 2 Minutes

When you’re shopping for a mortgage, it’s easy to focus on one number: the interest rate.

A lender may quote a lower rate, but that doesn’t necessarily mean the loan will cost less overall. Points, lender fees, closing costs, loan terms and other charges can change the actual cost of financing.

The good news is that you don’t need to spend hours comparing mortgage offers.

With the right information in front of you, you can get a much clearer picture in about two minutes.

Start With the Interest Rate

The interest rate affects the amount of interest you pay over the life of the loan and is one of the first numbers borrowers naturally look at.

But don’t stop there.

Two lenders can offer different rates with different upfront costs. One may offer a lower rate but require more points or fees to get it.

That’s why comparing the rate by itself can give you an incomplete picture.

Look at the APR

The annual percentage rate, or APR, gives you a broader view of the cost of borrowing.

Unlike the interest rate alone, APR incorporates the interest rate along with certain points, broker fees and other charges associated with the mortgage.

It isn’t a perfect comparison for every type of mortgage, but it can be a useful number to review alongside the interest rate.

Check the Loan Costs

Next, look at the actual costs associated with the loan.

  • Origination charges
  • Discount points
  • Lender fees
  • Appraisal and other required services
  • Title and settlement costs
  • Prepaid taxes and insurance
  • Other closing costs

Compare the Same Loan

This is where many comparisons go wrong.

If you’re comparing two mortgage offers, make sure you’re comparing similar:

  • Loan amounts
  • Loan terms
  • Loan programs
  • Down payments
  • Interest-rate structures
  • Points and fees

What Can You Compare in Two Minutes?

Here’s a simple checklist:

  • Interest rate — What rate is being offered?
  • APR — What does the broader borrowing cost look like?
  • Points — Are you paying upfront to obtain the quoted rate?
  • Lender fees — What is the lender charging?
  • Estimated closing costs — How much will you need to bring to closing?
  • Monthly payment — What will the estimated principal and interest payment be, and what other costs are included?
  • Loan term — Are you comparing the same repayment period?

A Lower Rate Isn’t Always the Lower-Cost Loan

This is one of the most important things to remember.

A mortgage with a lower interest rate can sometimes come with higher upfront costs. On the other hand, a slightly higher rate may come with fewer upfront charges.

The right comparison depends on your goals, how long you expect to keep the loan, and the complete cost structure.

Need Help Comparing Your Options?

At Point Capital Services, we help borrowers understand the financing options available based on their individual situation.

If you have multiple mortgage offers and aren’t sure how to compare the rate, fees and overall costs, talk with our loan team before making a decision.

Rates, fees, terms and program availability vary based on the borrower, property, lender and market conditions.

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