When I compare mortgage offers for my clients or my own properties, I always look beyond just the interest rate—it's crucial to consider the total cost over the life of the loan, including things like closing costs, points, and any prepayment penalties. During my time at Rocket Mortgage, I’d often help folks break down that fine print, making spreadsheets to see the true bottom line side by side. My advice: take your time, ask each lender to explain every fee, and focus on what’s best for your long-term goals, not just the monthly payment.
I recommend to my buyers to compare three mortgage companies. You can get pre-approved by three mortgage companies without it effecting your credit score. If you compare more than three, it will negatively impact your credit score. I encourage the buyers to talk with each of the lenders. Whichever lender they feel the most comfortable with, send them the other two estimates and have them talk through with you over the phone or by video each estimate along with comparing their own estimate. This will help you to make an educated decision.
There are quite a few important factors to consider. One that may not seem as obvious but I think is super important is whether or not there are prepayment penalties (and the specifics of what those penalties are). If you know that you want to try to pay off your mortgage early, it can be wise to look for a lender who specifically does not include any prepayment penalties in their offer, because that can allow you to pay off your mortgage early without owing extra. Even if you don't necessarily plan on paying it off early, you never know if maybe you end up in a situation where it's possible, so it can be invaluable to have a mortgage that has minimal penalties.