Sources checked October 22, 2026
Give each number a job.
Your interest rate is the cost of borrowing the money. APR, short for annual percentage rate, combines that rate with certain loan fees in one yearly percentage. It helps you compare borrowing costs, but it is not your monthly payment. More about rate and APR.
Start with three questions: What will I pay each month? How much money do I need upfront? How long do I expect to keep this loan? We can walk through each answer with you.
Make the offers comparable.
Ask lenders to use the same loan amount, down payment, loan type and repayment period. Get the quotes on the same day if you can. Rates can change, so ask whether each rate is locked (held for a set time under agreed conditions). The CFPB’s guide to comparing offers can help.
Put the offers next to each other. If one uses a different down payment or leaves out a fee, ask for an updated version before deciding.
Understand the points-and-credits tradeoff.
Discount points are an upfront fee you can pay for a lower rate. Lender credits usually work the other way: you accept a higher rate in exchange for help with closing costs.
One discount point costs 1% of the loan amount. It does not lower the rate by one percentage point. More about points and lender credits.
Ask us to show both choices in dollars. Paying more now may make sense if you keep the loan long enough to recover that cost. Moving or refinancing sooner can change the result.
Bring this checklist to the comparison.
- Do both offers use the same amount, loan type, repayment period and rate-lock terms?
- What are the points, lender credits and other loan charges?
- What is the payment with taxes, insurance and applicable mortgage insurance?
- How much cash is required at closing, and how much remains afterward?
- What changes if I keep this loan for less time than expected?
Your Loan Estimate is a standard form showing the expected payment and costs. “Cash to close” is the total money you need to complete the purchase. It can include your down payment, fees and money set aside for taxes and insurance, after credits and deposits are counted. The CFPB’s Loan Estimate explainer shows where these figures appear.
Finish by asking your loan officer to explain the meaningful differences in plain language. You should leave able to say what you gain, what you give up and which assumptions could change the decision.
Sources & further reading
Sources checked October 22, 2026. These guides explain the basics. Your loan officer checks which options fit your situation and explains the current rules. A guide is not a loan approval. Ask a qualified adviser about personal tax or legal questions.
Want to talk this through?
You do not need to know every mortgage term before you call. Bring your questions. We can explain the choices and help you work out the next step. Ask us for a secure way to share documents.