Your Guide to Comparing Lender Quotes
You’ve found your dream home and completed your due diligence by interviewing different lenders. Now it’s time to evaluate and compare the quotes they provided.
As you may have already realized, the challenge with this task is that quotes from different lenders can look different – each may list line items in a different order, combine them differently, or use different labels. Some fees might be grouped together, labeled differently, or even omitted entirely by certain lenders.
Focus Areas for Comparison:
Lender Fees:
- The key is to isolate and focus on lender-specific costs for the same interest rate and term.
- Lenders may use various labels for these fees, such as origination fee, discount points, processing, underwriting, document review, or application fees.
- Remember, not every lender will list all these fees.
Title Fees:
- These fees include attorney fees, title searches, closing protection letters, title binder, and lender’s & owner’s title insurance.
- Title fees are consistent across all lenders because they depend on the closing attorney, not the lender.
- For new constructions, the builder decides the closing attorney, while for resale contracts, the attorney is specified in the contract.
- Title fees will be the same across all the lenders you are comparing since the closing attorney will be the same, irrespective of which lender you choose.
Government Fees:
- These include recording fees, intangible and transfer taxes, and any state-specific taxes.
- Government fees remain the same across all lender quotes.
Estimated Pre-paid Items:
- At closing, you’ll pre-pay the 1st year’s home insurance premium and mortgage interest from the closing date until the end of the month.
- These costs depend on the policy you choose and your closing date, so they will be the same across all lenders.
Escrow Items:
- Your escrow account is set up at closing and funded according to a federally mandated formula. You’ll begin funding your escrow accounts by making an initial deposit into the account at closing.
- The Real Estate Settlement Procedures Act (RESPA) requires all lenders to follow the same guidelines for managing escrow accounts, so these amounts will be consistent across all lenders on the final Closing Disclosure.
HOA Items:
- If your home is part of a Homeowners’ or Condo Association, you will be responsible for the initiation/capital contribution fees.
- These fees are set by the association, so they remain the same regardless of the lender.
Key to Comparison:
To effectively compare lender quotes, remove all costs that will remain the same—title fees, government fees, pre-paid items, escrow items, and HOA dues. This will allow you to isolate and focus on the lender-specific costs.
Remember, cost is just one part of the equation. It’s crucial to choose a lender you trust for this significant transaction.
If you need help making an apples-to-apples comparison, don’t hesitate to email or call me. I’ve created a spreadsheet to simplify the process, so feel free to reach out if you’d like to use it.
The BankSouth Mortgage Advantage:
Experience the speed of ReadyApprove from BankSouth Mortgage, where you can secure conditional approval for conforming loan limits within hours. You’ll be armed with the confidence to quickly submit an offer, and the seller will see you as a serious, prepared buyer. Have peace of mind with our FREE one-time rate float-down* and no lender fee refinance options!
Take advantage of our Buy Now, Refinance Later with a No Lender Fee Refinance** option for buyers who are purchasing currently at increased interest rates. Homebuyers who started their loan application with BankSouth Mortgage on or after June 15th, 2023, and close their loan with BankSouth Mortgage will be eligible for exclusive savings. Available on primary residence only and must be used within 60 months of the close date.
*One-time float down available on 45-120 day rate locks. Float down must be executed at least 15 days prior to closing and must be at least .125 improvement.
**Must refinance after 6 months from the 1st payment date and within 5 years of the close date. Available for new applications on or after 6/15/2023. Subject to credit and property approval. Additional conditions may apply. Terms are subject to change. “No Lender Fees” only apply to origination charges.
Blog post date: Monday, August 26, 2024
