Compare and negotiate your loan offers | Consumer Financial Protection Bureau (2024)

What to do now

Compare the details of your Loan Estimates to see how they stack up against one another.

Use our Loan Estimate Explainer to understand what each offer means for you. Look at:

• The loan amount.
• The interest rate. Interest rates can change daily, so a difference in rate between two lenders could be because of market changes for Loan Estimates issued on different days. For adjustable-rate mortgages (ARMs), look at the worst-case scenario if interest rates rise.
• The monthly principal and interest payment.
• The monthly mortgage insurance payment (if any).
• The total monthly payment, including principal and interest, mortgage insurance, and escrow for property taxes and homeowner’s insurance.
• The upfront loan costs (listed on page 2 in Section D, Total Loan Costs), especially the origination charges.
• The lender credits (listed on page 2 under Section J, Total Closing Costs).
• The “cash to close” (listed on page 2). You typically need a cashier's check or wire transfer for this amount at closing.

Compare the upfront lender costs

When comparing closing costs, focus on the fees that vary by lender. Those are the total origination charges in Section A, the services listed in Section B, and lender credits listed in Section J. Origination charges are upfront fees charged by your lender. Lender credits are rebates to offset your closing costs.

Calculate your five-year cost of borrowing

On average, borrowers keep a mortgage for about five years before moving or refinancing. While your situation may be different, figuring out the total dollar amount you pay in interest and fees over five years is a good way to compare loan offers.

• On page 3 of the Loan Estimate, locate the “In 5 years” line in the Comparisons section. The first number shows you the total dollar amount (including principal) you will pay over five years. The second number shows you the amount of principal you will have paid off after five years.
• Subtract the second number from the first number, and you’ll get the total amount of interest and fees you will have paid after five years. This is your five-year cost of borrowing.
• Note: If you’re considering an adjustable-rate mortgage (ARM), keep in mind that the five-year cost assumes that interest rates stay the same. If interest rates go up, your actual cost of borrowing will be higher.

Confirm your loan option and approach to points or credits

If a lender gave you something different than what you asked for, or you want to see other options, it's not too late. You can go back to each of your lenders and ask to see a Loan Estimate that more closely matches your ideal scenario.

Negotiate to get the best deal for you

Negotiating can save you money. Your best bargaining chip is usually having Loan Estimates from other lenders in hand. Often, lenders are willing to match or beat their competitors’ offers. They can also explain why their estimates differ from other lenders. If the lender you feel most comfortable with is charging more, ask them to match what you find elsewhere. Negotiating is best done over a short timeframe after you have a signed purchase contract. If you switch lenders later, talk to the lender to make sure they can close on time.

What to know

Your comparison should focus on numbers that are within the lender’s control

If one Loan Estimate shows significantly lower taxes and insurance, it doesn’t mean that loan is a better deal. Lenders don’t control your taxes and insurance. That’s true for some other costs too. If the following costs aren’t similar, ask your lender why:

• Escrow amounts for property taxes and insurance (page 1)
• Taxes and other government fees (page 2, Section E)
• Prepaids (page 2, Section F)
• Initial escrow at closing (page 2, Section G)

How to avoid pitfalls

Loans with “no closing costs” aren’t free

Some lenders advertise loans with “no closing costs,” but the catch is the loan has higher monthly payments. Get more details about how no-closing cost loans work.

Stay alert for warning signs

If what a Loan Estimate says is very different from what you discussed with your loan officer, be wary. Ask questions. It could be a simple miscommunication, or it could be a sign that you should consider choosing a different lender.