When comparing loan estimates.........

Question

When comparing loan estimates what are the most important things to consider in order to know which deal is the best now and the best in 5 years?

APR? Interest Rate? Origination Fee?

I've been getting mortgage loan estimates and they are very different and actually changed in the last week.

Is it possible to get detailed loan estimates without giving my SSN

My credit score went down 23 points ever since I had 2 estimates so far.

David M. · Answer

@Dale Miller

Yes, the prepaids/escrows and the other closing costs are pretty much guesses.  For one, they tend to estimate them high because its safer to give you a higher estimate than lower.  Also, there are MANY variables for determining those estimates.  For example, are you closing towards the beginning or the end of a tax payment period?  Are you closing towards the beginning or end of the month as that affects the size of the pro-rated mortgage payment.  I see you are from NY.  As I recall growing up, the various school and property taxes vary around the year.  In NJ, our taxes are all lumped together are and are straight quarterly payments.

Also, are you using local lenders?  Non-local lenders have to "guess" at various fees such as inspections.  I have a similar problem in NJ as "north NJ" customarily uses lawyers while "south NJ" does not.  So, if a "south NJ" lender is doing the estimate, they tend to not put attorney fees in their estimates, or if they are they are guessing unless they ask me.

Also, what sort of utilities is the lender assuming the property you will buy will have?  Around me, its can get expensive when you don't have public utilities because there are inspections / tests for the well water, septic, underground storage tank, in addition to the home inspection w/ radon testing.

Bottom line:  you want to see what is the cost of the loan and what sort of interest rate will they give you.  As you might expect, the costs of the loans, i.e. the lender fees, are generally about the same.  It comes down to what sort of service will they provide and what sort of interest rate will they give you.  If you have a really good loan officer that will take the time to generate lots of estimates for you, that's great because that will help you determine what loan is the most cost effective, cheapest for your "now.  send me a direct message if you want to see if I can help find you a lender.

Dale Miller · Answer

@David M That is what I think is a good idea. I've been lining up lenders for 2 or 3 weeks. Origination fees are pretty close all about within $150. Closing costs (loan cost) are way different and I'm wondering why one is 2500 more. Also not sure if I should compare the other closing costs not associated with loan closing costs because seems like it is a guess about taxes and insurance and escrow. Thanks for your reply!!

David M. · Answer

@Dale Miller

If you want to loan shop, line up a bunch of lenders, and have them pull your credit during the same week.  They should know that, if not, drop them.  The credit bureaus know they have to let you shop around, so multiple s credit score reports in the same 2-3 weeks is considered as one pull

As for figuring out the best, mainly look for what does the lender charge for the loan.  That is, what is their fee.  Trying to compare interest rates w/o points requires being able to figure out how much interest you’ll be saving over a time period.  Basically, you want to see how long does it take for you to make back the cost of lowering the interest rate, ie the points.  Then, it’s something of a judgement call if it’s worth it.  Depends on how long you plan on holding the loan...  I persoanlly have never been a big fan of points.  Breaking even in a 2-3 years isn’t too bad.  Don’t forget you need to bring the that much more cash to closing...