Shop Mortgages Like a Pro to Save Thousands
Maria had her eye on a charming bungalow, so she visited three local banks and two online lenders to shop for a 30-year fixed-rate mortgage. One bank offered 6.2% APR and $2,000 in fees. Another quoted 6.15% but tacked on a $3,500 origination fee. An online lender matched 6.25% with zero fees.
She sketched out a simple table: APR cost per year plus amortized fees over 30 years. Even though the online lender’s rate was slightly higher, its zero fees made it the cheapest overall option. With her kitchen renovation budget in mind, she grabbed the online deal.
Case studies like Maria’s show that the lowest rate isn’t always the best deal. The Consumer Financial Protection Bureau reports borrowers can save thousands by factoring in all costs: points, origination, application fees, and more.
By treating mortgage shopping like a procurement process—requesting itemized quotes, comparing APRs, and calculating total costs—Maria secured the bungalow and kept her renovation fund intact. Smart homework paid off big.
When you find a home you love, get APR quotes from multiple lenders online and in person, and insists on a full list of fees—plainly itemized. Lay out your own comparison grid to calculate the total cost over 30 years. Then choose the lender whose combined APR and fees leave the most money in your pocket.
What You'll Achieve
You will save thousands by mastering a systematic comparison of APRs and fees, ensuring the mortgage you choose is the lowest total-cost option.
Compare APRs and Fees Across Lenders
Gather multiple rate quotes
Use websites like Bankrate and HSH to get APRs from at least three lenders. Make sure you’re comparing the same loan types—e.g., 30-year fixed-rate mortgages.
List all non-APR fees
Ask each lender for details on origination, appraisal, and discount point fees. Note which fees are refundable, which aren’t, and how they affect your total cost.
Calculate total loan cost
For each lender, add the APR-based yearly cost plus all upfront fees amortized over the loan’s term. Choose the lender with the lowest combined amount.
Reflection Questions
- What total cost difference did you find between your lowest-rate lender and the lowest-fee lender?
- How might a $1,000 switch in fees impact your renovation budget or emergency fund?
- What surprised you most about the hidden costs lenders add on?
Personalization Tips
- A software developer saved $12,000 by comparing total costs of three 30-year fixed mortgages from local banks and credit unions.
- A startup founder included realtor, appraisal, and origination fees in the math, choosing a slightly higher rate but far lower total fees.
- An artist locked in a 60-day rate, then switched lenders when a better APR appeared—she saved enough to renovate her kitchen.
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