When shopping for a mortgage, many borrowers focus on one thing: the interest rate. But comparing lenders based on rate alone can be misleading—and costly. The real story is told in your Loan Estimate, a standardized document designed to help borrowers compare loan offers accurately.
Knowing how to read and compare a Loan Estimate empowers you to choose the right lender, avoid unnecessary fees, and potentially save thousands over the life of your loan.
A Loan Estimate (LE) is a standardized three-page document lenders are required to provide shortly after you apply for a mortgage. It outlines the key terms, projected payments, and closing costs of your loan.
Because every lender must use the same format, Loan Estimates are meant to make apples-to-apples comparisons possible—but only if you know what to look for.
A low interest rate can be appealing, but it often comes with trade-offs. Some lenders advertise lower rates while charging higher fees or requiring discount points that take years to break even.
Two loans can have:
That’s why comparing the full Loan Estimate—not just the rate—is essential.
This section shows:
Make sure the loan type, term, and rate structure are the same when comparing lenders.
This breaks down:
Some lenders underestimate taxes or insurance to make payments look lower. Accuracy matters here.
This is where major differences usually appear.
Pay close attention to:
Lender fees are the easiest place to spot unnecessary costs.
Discount points are upfront fees paid to lower your interest rate. Sometimes they make sense—but often they don’t.
Ask:
Many borrowers unknowingly overpay here.
The Annual Percentage Rate (APR) reflects the interest rate plus certain fees spread over the loan term. While not perfect, APR helps reveal which loan is truly more expensive.
If two loans have similar rates but very different APRs, fees are the reason.
This shows how much money you need at closing. Differences here can come from:
Understanding why the number differs matters more than the number itself.
Some of the most frequent mistakes include:
These mistakes often lead to higher long-term costs.
To compare lenders accurately:
If anything is unclear, ask questions—or get a second opinion.
This is exactly why Seattle Mortgage Pros created LE Compete.
With LE Compete:
No pressure. No obligation. Just transparency.
Many borrowers don’t realize how much flexibility exists in loan pricing and structure. A quick review can uncover:
Even small improvements can add up over time.
A Loan Estimate is more than a form—it’s a roadmap to understanding your mortgage. Knowing how to read it and compare lenders properly puts the power back in your hands.
The best loan isn’t always the one with the lowest rate. It’s the one that fits your goals with the lowest true cost.
.png)
.png)
.png)
