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Buying a Home

How to Compare Mortgage Lenders (and Save Thousands)

Getting just one extra mortgage quote saved borrowers about $1,500 on average, Freddie Mac found. Here's a step-by-step way to shop and compare lenders.

By · Updated · 4 min read

People comparing information on a laptop, shopping mortgage lenders

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Quick answers

  • Get quotes from at least three lenders, ideally five, on the same day.
  • Freddie Mac research found one extra quote saved borrowers about $1,500 on average over the life of a loan, and five quotes saved about $3,000.
  • Compare the official Loan Estimate forms, not ads. Look at rate, points, lender fees and APR together.
  • Multiple mortgage credit checks in a short window are generally treated as one inquiry by credit scoring models.

Most people would never buy a car without checking a few dealers. But according to Freddie Mac, nearly half of borrowers don’t shop around for a mortgage, even though it’s often the biggest loan of their life.

Shopping lenders isn’t hard, and you don’t need to be a finance whiz. Here’s a simple, step-by-step way to compare offers and spot the best deal.

Why shopping matters

Lenders don’t all charge the same rate for the same borrower on the same day. Freddie Mac studied two decades of its weekly rate survey and found that borrowers who got five quotes lowered their rate by about 0.17 percentage points on average.

Example

A $350,000 30-year loan (principal and interest only):

  • At 7.18%: about $2,371/month
  • At 7.014% (0.166 points lower): about $2,332/month

That’s about $39 a month, or roughly $2,350 over five years. For a few phone calls and some paperwork, that’s a great hourly wage.

Step 1: Get your house in order first

Step 2: Pick a mix of lenders

Lender type Pros Watch out for
Big bank Familiar, may offer relationship discounts Not always the lowest rate
Credit union Often competitive rates and lower fees Membership required
Online lender Fast, easy comparisons Less hand-holding
Mortgage broker Shops many lenders for you Ask how they’re paid

Getting quotes from different types of lenders gives you a better sense of the real range.

Step 3: Ask for Loan Estimates, not just rates

Once you apply, each lender must send you a standard three-page Loan Estimate within three business days. Because every lender uses the same form, it’s the easiest way to compare apples to apples. Our Loan Estimate guide walks through it line by line.

To make the comparison fair:

  • Ask for quotes on the same day, since rates change daily.
  • Use the same loan type, term, down payment and lock period for each.
  • Ask each lender to quote with zero points as a baseline, then ask what points would buy.

Step 4: Compare the right numbers

  • Interest rate: Drives your monthly payment.
  • Points: Upfront fees to lower the rate. See mortgage points explained.
  • Origination charges (Section A): The lender’s own fees. These vary the most between lenders.
  • APR: Rolls rate and certain fees into one number. Helpful, but not perfect. See APR vs. interest rate.
  • Cash to close: What you’ll actually bring to the table. The closing cost calculator helps you sanity-check it.
Myth buster“Shopping lenders will wreck my credit score.” Not really. Credit scoring models generally count multiple mortgage inquiries within a short shopping window (often 14 to 45 days, depending on the model) as a single inquiry. Do your shopping in a tight time frame.

Step 5: Negotiate

Yes, you can. Tell your favorite lender you have a better offer and show them the Loan Estimate. Many will match or beat it, especially on lender fees. Ask about:

  • Waiving or lowering application, processing or underwriting fees
  • Lender credits toward closing costs
  • A longer rate lock or a float-down option
Fun factFreddie Mac’s weekly survey, the one behind most “average mortgage rate” headlines, has been running since 1971.

Step 6: Check the lender, not just the price

  • Look up the lender or loan officer on the NMLS Consumer Access website to confirm they’re licensed.
  • Read reviews, especially about closing on time.
  • Ask how they communicate and who you’ll talk to if there’s a problem.

A slightly cheaper lender that misses your closing date can cost you more than it saves.

Red flags

  • A rate that seems far below everyone else’s, with big points buried in the fine print
  • Pressure to sign right away
  • Asking you to wire money before you have a Loan Estimate
  • Telling you to leave information off your application

Getting ready to buy? Our first-time home buyer checklist and pre-approval vs. pre-qualification guide pair well with this one.

FAQ

How many mortgage lenders should I compare?

At least three. Freddie Mac research found savings kept growing up to five quotes.

Does getting multiple mortgage quotes hurt my credit?

Generally only a little. Scoring models usually treat several mortgage inquiries within a short window as one.

When should I shop for a mortgage lender?

Ideally when you’re getting pre-approved, and again once you have a signed purchase contract, since that’s when you can lock a rate.

Is the lowest rate always the best deal?

Not always. Compare points, lender fees and total cash to close. A low rate with high points can cost more overall.

Sources: Freddie Mac Economic & Housing Research Insight, “Why Are Consumers Leaving Money On The Table?” (April 2018); Consumer Financial Protection Bureau (Loan Estimate and mortgage shopping guidance). Payment examples are principal and interest only. This article is general education, not financial advice. Keys & Coffee is not a lender.

Shivam Kaushik (IMSHIVA)

Written by

Shivam Kaushik· IMSHIVA

Founder & Director, QuibbleTech Solutions Pvt Ltd · Editor, Keys & Coffee

Shivam Kaushik is the founder of QuibbleTech Solutions Pvt Ltd and the editor of Keys & Coffee. He is not a licensed loan officer or financial adviser. Every guide here is written in plain English and checked against official sources such as the CFPB, HUD, Fannie Mae, Freddie Mac and the Federal Reserve. For advice on your own loan, talk to a licensed lender.

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Keys & Coffee is an independent education site. We are not a lender or mortgage broker, we do not take loan applications or payments, and nothing here is financial advice. This site is not affiliated with Axia Home Loans, Axia Financial, LLC, or Planet Home Lending. Rates and rules change often — always confirm details with a licensed loan officer and check any lender on the NMLS Consumer Access site.

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