Learn / How to Shop for a Mortgage

How to Shop for a Mortgage

Getting the best deal comes down to comparing real offers on the same day and reading the fees, not just the rate.

Get pre-approved first

A pre-approval tells you your budget and makes your offers stronger. It also gives you a Loan Estimate you can compare against other lenders.

Compare Loan Estimates

Every lender must give a standardized Loan Estimate. Compare the rate, the APR, the lender fees, and the cash to close side by side. A low rate with high fees may cost more than a slightly higher rate with low fees.

Rate shop without hurting your credit

Multiple mortgage inquiries within a short window, often 14 to 45 days, usually count as a single inquiry for scoring, so you can compare several lenders with little credit impact.

Reading page 2 of the Loan Estimate

Page 2 is where offers actually differ. It splits closing costs into three sections, and only one of them is really about the lender.

Sections E, F, and G are not costs of the loan. Property taxes, prepaid interest, and escrow deposits are amounts you would owe regardless of which lender you use. A quote that looks cheap because it assumed a shorter escrow cushion has not saved you anything.

Comparing three offers without getting lost

Quotes are only comparable when the inputs match. Request all of them on the same day, for the same loan amount, the same down payment, the same lock length, and the same points assumption. Then compare in this order: section A, the break-even on any points, the APR, and cash to close.

A common trap is an offer with a lower rate produced by points that were never discussed. Divide the extra up-front cost by the monthly savings to get the break-even in months. If that number exceeds how long you expect to keep the loan, the lower rate is not a discount.

Rate shopping and your credit score

Mortgage inquiries pulled within a short shopping window are treated as a single inquiry by the scoring models lenders use, so several applications in that window are scored roughly the same as one. The window is limited, which is the practical reason to gather quotes in a tight cluster of days rather than spread across a month.

What does move a score during shopping is unrelated new credit. Opening a card, financing furniture, or taking an auto loan between application and closing can change both your score and your DTI, and lenders commonly re-check both before funding.

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Frequently asked questions

How do I compare mortgage lenders?

Get Loan Estimates from several lenders on the same day and compare rate, APR, fees, and cash to close.

Does rate shopping hurt my credit?

Multiple mortgage inquiries in a short window usually count as one, so shopping around has little impact.

Should I always take the lowest rate?

Not automatically. Weigh the fees and points behind the rate to find the lowest total cost.

Which section of the Loan Estimate should I compare first?

Section A on page 2. It holds origination charges, points, and underwriting fees, which is the part the lender actually controls. Sections E, F, and G are taxes and escrow funding you would owe with any lender.

Does applying with several lenders hurt my credit score?

Mortgage inquiries made inside a short shopping window are treated as a single inquiry by the scoring models lenders use. Gathering quotes in a tight cluster of days keeps them inside that window.

How do I tell whether paying points is worth it?

Divide the extra up-front cost by the monthly savings to get the break-even in months. If you expect to sell or refinance before that point, the lower rate never pays for itself.