VIDEO: Comparing Rates Between Lenders

We’re taking a detailed look at how to use an LE form to compare lenders.

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How do you compare rates between mortgage lenders? One lender may decide to give you an Excel spreadsheet, and another might give you a good-faith estimate or an itemization fee worksheet. If you want to make it easy on yourself, get a LE (loan estimate) directly from their system that tells you exactly what their costs are. An LE allows you to compare apples to apples, and today I’m going to show you how.

On page one of the LE, first look at your loan amount and interest rate. Then ignore everything else on that page, including the estimated closing costs at the bottom.

On page two, you will see where the rubber meets the road. Go to box A in the top left corner, and you’ll see underwriting, origination fees, and bank fees. This info will let you see what this specific bank charges. Box B and Box C can be ignored.

Focus your attention on Boxes A, B, and J.

In Box E, you have your taxes, Box F gives you your prepaids, and Box G has your escrow account. You can ignore all of those too because the costs for these are all the same regardless of the lender. Down on Box J, you’ll see a line for lender credit. Check that to see if they’re giving you a credit that offsets any of your costs.

So to recap, pay attention to your interest rate, and Boxes A, B, and J on the first two pages. On the third page, you’ll see your APR and other things to help you know where you’re getting the best deal.

Finally, there’s one more little trick. Call your lenders and ask them if they use a software called Mortgage Coach. If they do, you can use that software to make comparisons of many different lenders and break it down to what’s the best deal right now or what the best deal is in 10 years. If your closing costs are high but the interest rate is low, it’s probably a better deal in the long run and a bad deal in the short run.

If you have any questions or would like us to help you compare lenders via Mortgage Coach, don’t hesitate to reach out via phone or email. We look forward to hearing from you soon.