Offer Comparison Workspace

How to use this calculator

Read the full guide: Closing costs basics

How it works

Add up to three lender scenarios with the same loan amount and term. For each offer, enter note rate, discount points, lender credits, closing costs, and monthly escrows if shown. The workspace compares monthly P&I payment, estimated cash to close, five-year total cost, and charts which offer costs more over time relative to the best baseline.

Worked example

Example: $360,000 loan, 30-year fixed. Offer A: 6.625%, $0 points, $7,200 fees. Offer B: 6.500%, 1 point ($3,600), $5,800 fees. Offer C: 6.375%, 2 points ($7,200), $4,500 fees. Offer C has lowest rate but highest upfront points. If you sell in 5 years, Offer A may have lower five-year total cost even with a higher rate. The scoreboard shows extra cost vs the best offer over 60 months.

Make the quotes comparable before you compare them

Most borrowers who conclude that shopping lenders is pointless were comparing quotes that were never comparable. Four things have to match: the loan amount, the term, the lock period, and the date. Mortgage pricing moves daily with the bond market, so a quote from Monday and a quote from Thursday are measuring two different markets, not two different lenders.

Lock period matters more than people expect. A 15-day lock prices better than a 45-day lock because the lender is carrying less risk. If one quote assumes a 15-day lock and your closing is six weeks out, that rate is not available to you.

The cleanest approach is to ask every lender for par or zero-point pricing on the same day, with the same lock, for the same loan. That strips out the structural differences and leaves you comparing the thing you actually want to compare, which is rate and fees.

Which fees are negotiable and which are not

Lender fees are the negotiable part: origination, underwriting, processing, application, and rate-lock charges. These are the lender's revenue, they vary widely, and a competing quote is real leverage. Borrowers who ask a lender to match a rival's fee structure succeed often enough to make the call worthwhile.

Third-party services where you are allowed to shop, such as title insurance and settlement services in many states, are also worth comparing. Your lender's recommended provider is not always the cheapest, and the Loan Estimate tells you which items you may shop for.

Then there are fees nobody controls: recording charges, transfer taxes, and government fees. Prepaid items such as the first year of homeowners insurance, prepaid interest to the end of the month, and the initial escrow deposit are not really lender costs at all. They are money you would owe regardless, and a lender who omits them from an estimate is not cheaper, only less complete.

Your hold period changes the winner

In the example, Offer C has the lowest rate at 6.375 percent but costs $11,700 upfront in points and fees. Offer A is a quarter point higher with $7,200 in fees and no points. The rate difference saves roughly $58 a month, so recovering the extra $4,500 of upfront cost takes about six and a half years.

That is the whole decision. Stay ten years and Offer C wins comfortably. Sell or refinance in four and Offer A was the better deal despite showing a worse rate and a worse APR. The five-year window this tool uses is a reasonable default because it sits near the median hold period, but it is a default, not a fact about you.

If there is a realistic chance you move or refinance inside three years, lean toward the lowest upfront cost even at a higher rate, and consider a lender credit. If you are confident this is a long-term house, buying the rate down is the stronger play.

What the numbers do not capture

A lender who cannot close on time has a real cost that does not appear in any fee column. A delayed closing can mean a rate lock extension fee, a per-diem penalty in your purchase contract, or in the worst case a lost deal and a lost earnest deposit. Responsiveness during the quote stage is a reasonable proxy for responsiveness during underwriting.

Program fit matters too. Comparing an FHA quote against a conventional one on rate alone is misleading, because FHA mortgage insurance generally lasts the life of the loan with a low down payment while conventional PMI can be removed at 80 percent loan-to-value. The cheaper monthly payment today can be the more expensive loan over a decade.

Enter figures from written Loan Estimates rather than verbal quotes, and use page two as your source for the fee lines. See reading a Loan Estimate for a walkthrough, closing costs basics for what each category covers, and the APR calculator if you want to see how points move the disclosed rate.

What this calculator does not include

• Does not replace Loan Estimate or Closing Disclosure review.
• Assumes you enter accurate fees and credits; missing prepaids skew cash to close.
• Five-year horizon may not match your actual hold period.
• Does not model ARM adjustments or PMI duration differences in depth.
• Tax and insurance must be consistent across offers for fair comparison.

Frequently asked questions

Should I compare APR here?

Use monthly payment, cash to close, and multi-year cost. APR is in the APR calculator; hold period matters more than APR alone.

What if lock periods differ?

Normalize lock days before comparing. A 15-day lock rate is not the same product as 45-day lock.

How do lender credits work in the tool?

Enter credits as negative costs or dedicated fields if provided. Credits trade rate for lower cash to close.

Can I compare FHA vs conventional?

Only if loan amount, MI, and fees are entered accurately for each program. Programs have different MI rules.

Why five years?

A common planning window. Adjust your mental horizon; if you stay 10 years, weight total interest more heavily.

Educational tool only. Not a Loan Estimate, appraisal, tax advice, or legal opinion. Numbers are illustrative unless you enter your own verified inputs.