Spending a few minutes to compare Lender rates and fees can literally save you thousands of dollars. It is worth spending a little bit of time to understand how to compare and do a little homework.
The biggest thing is to make sure you are comparing 'apples-to-apples'. This is a quick checklist to help you get the best loan at the best price:
Financial markets change frequently, which affect all Lenders. To do a good comparison, make sure the quotes are within a couple hours of each other.
If you are looking for a 30 year fixed loan, make sure all the quotes are for a 30 year fixed loan. With very few exceptions, all Lenders are offering the exact same products.
Your goals and financial condition are a major factor in the cost of your home loan. Make sure the credit score, loan amount, down payment, property type and usage are the same on each quote.
Interest rate is an important number. The Annual Percentage Rate (APR) is equally important. The APR helps to compare the total cost of the loan.
Lender A: Interest Rate 4.50% | 4.89% APR
Lender B: Interest Rate 4.50% | 5.22% APR
Both Lender A and B are offering 4.50% interest rate. Notice how Lender B's APR is higher than Lender A. The APR looks at other loan costs, like Discount Points.
Discount Points are charged to reduce the interest rate. Basically, you pay some interest 'upfront' at closing in order to pay less interest each month.
There is nothing wrong with Discount Points. Just make sure when comparing rates that all the quotes either include or exclude discount points. That way you get a true comparison.
A lender credit is money from your mortgage lender to help cover the mortgage-related closing costs. These funds are typically provided by offering a higher interest rate.
Lender fees vary in name, but are charged and retained by the Lender. These are called 'Processing Fees', 'Underwriting Fees', 'Application Fees', etc.
The Lender Fee(s) typically range from $750 to over $2,000. This is another most cost to make sure you understand and compare.
How do they Compare?
Doing a little homework to compare Lenders can save you hundreds per month and many thousands over the life of the loan.
A Loan is a Loan is a Loan.
The vast majority of loan products offered by Lenders are the exact same loan products. A conforming 30 year fixed mortgage…is a conforming 30 year fixed mortgage. Regardless of the Lender, you finance your home for 30 years and make your payments every month. Ever heard of a generic or brand name mortgage? Nope? We haven't either.
Interest Rate and Annual Percentage Rate (APR)
The Interest Rate is the basic cost of financing the principal loan amount. Your monthly payment for principal and interest (P&I) are based on the interest rate. The Interest Rate does not consider the cost of getting a mortgage.
The Annual Percentage Rate (APR) is a more comprehensive measure of financing your home. The APR includes both the Interest Rate and the cost of getting a mortgage. The APR includes many potential fees, but include discount points, lender fees, etc.
Truly Mortgage Lender Costs
Truly Mortgage Lender Cost is $995 per loan. This is a loan fee charged and retained by Truly Mortgage. This cost is only collected or due at the time of loan closing. This is never collected outside of closing.
Fees or Credits:
A positive number means there is a fee (charge to you) for the interest rate shown. A negative number means there is a credit (money back to you) for the interest rate shown.
Interest rates are offered in increments of 1/8th, e.g. 4.5%, 5.125%, etc. Based on your quote scenario, the interest rate shown might be a little below or above market. This can be confusing, but our goal is to be transparent. We are happy to explain how this works and different options.
