Start by checking your credit score before you contact any lender
Your credit score is the first number a lender looks at, and it directly affects the rate you will be offered. Before you call a single bank or mortgage company, pull your credit report from all three bureaus—Equifax, Experian, and TransUnion—at annualcreditreport.com, which is the only free source authorized by federal law. You are may have access to to one free report per bureau per year.
If you see errors on your report, dispute them in writing with the bureau before you shop for rates. Correcting a mistake can take 30 to 45 days, but it may raise your score enough to move you into a better rate bracket. If your score is lower than you expected, you have a choice: wait a few months while you pay down debt and dispute errors, or shop now and refinance later when your score improves.
Lenders typically pull your credit when you request a rate quote, and multiple pulls within 14 to 45 days usually count as a single inquiry. This window matters because each inquiry can lower your score slightly. Shopping within a short timeframe minimizes the damage.
Key Takeaways
- Pull your credit report from annualcreditreport.com before contacting lenders, because your score determines the rate you will be offered.
- Get rate quotes from at least three different lenders—banks, credit unions, and mortgage brokers—because the same loan can vary by 0.5% or more between them.
- Ask each lender for the same loan type (15-year fixed, 30-year fixed, or adjustable-rate) so you can compare apples to apples, and request the full Loan Estimate form, which shows fees and the true cost.
- Lock your rate in writing once you find the best offer, because rates can change daily and a verbal promise does not protect you.
- Compare the annual percentage rate (APR), not just the interest rate, because APR includes fees and shows the true yearly cost of borrowing.
Get quotes from banks, credit unions, and mortgage brokers in the same week
The interest rate you are offered depends on the lender, not just on market conditions. A bank, a credit union, and a mortgage broker can all quote you different rates for the same loan on the same day. The difference is often 0.25% to 0.5%, which translates to thousands of dollars over the life of the loan.
Start with your own bank or credit union if you have an account there—they sometimes offer a small discount to existing customers. Then contact at least two other lenders: another bank, a credit union (if you are not already a member, some allow you to join), or a mortgage broker. A mortgage broker works with multiple lenders and can show you options from several at once, which saves time.
Request quotes from all three within the same week. Rates change daily, and comparing quotes from Monday and Friday is not meaningful. When you call or visit a lender's website, you will usually get a preliminary rate quote within minutes, but the official quote comes on a form called the Loan Estimate, which you receive after you formally request one.
Request the Loan Estimate form and compare the full cost, not just the rate
The Loan Estimate is a three-page federal form that every lender must provide within three business days of your request. It shows the interest rate, the monthly payment, all fees (origination, appraisal, title, underwriting, and others), and the total amount you will pay over the life of the loan. This is the document you use to compare lenders fairly.
Two lenders might quote you the same interest rate but charge different fees. One might charge $1,500 in origination fees and another $500, which means the second lender's true cost is lower even if the rate looks the same on paper. The Loan Estimate also shows the annual percentage rate (APR), which includes both the interest rate and the fees, expressed as a yearly percentage. Compare the APR across lenders—it is the single most honest number for comparison.
Pay attention to the closing costs section. Some lenders advertise a low rate but make up the difference in fees. Others charge less upfront but a slightly higher rate. The Loan Estimate lets you see the trade-off clearly. Ask each lender whether any fees are negotiable—origination fees and discount points sometimes are.
Decide between a fixed rate and an adjustable rate based on how long you plan to stay
A fixed-rate mortgage keeps the same interest rate and monthly payment for the entire loan—typically 15 or 30 years. Your payment never changes, which makes budgeting predictable. Fixed rates are higher than adjustable rates at the time you lock in, but you pay the same amount every month for decades.
An adjustable-rate mortgage (ARM) starts with a lower rate for a set period (often 3, 5, 7, or 10 years), then adjusts up or down based on market conditions. After the fixed period ends, your payment can rise significantly. ARMs make sense only if you plan to sell or refinance before the rate adjusts, or if you are confident you can afford the payment if rates rise.
When you shop for rates, request quotes for both a 30-year fixed and a 15-year fixed, and ask about ARM options if you are interested. This lets you see the trade-offs: a 15-year fixed builds equity faster but costs more per month; a 30-year fixed spreads payments over longer but costs more in total interest; an ARM starts cheaper but carries risk. Compare all three on the Loan Estimate so you understand the real monthly difference.
Lock your rate in writing as soon as you find the best offer
Once you have chosen a lender and agreed on a rate, ask them to lock it in writing. A rate lock is a may provide that the lender will honor that rate for a set number of days—usually 30, 45, or 60 days—even if market rates change. Without a written lock, the lender can change your rate before closing.
The lock period matters because your loan takes time to process. The lender needs to order an appraisal, verify your income and employment, review the title, and underwrite the loan. This usually takes 30 to 45 days. Ask the lender how long they expect the process to take, then request a lock period that covers that time plus a few extra days as a buffer.
Some lenders offer a "float down" option, which lets you lower your rate if market rates drop before closing. This costs extra (usually 0.125% to 0.5% of the loan amount) but protects you if rates fall. If you think rates might drop, ask about the cost and decide whether it is worth it for your situation.
Watch for common fees and ask which ones are negotiable
The Loan Estimate breaks down every fee, but some are more negotiable than others. Appraisal fees, title insurance, and property taxes are set by third parties or local government and cannot be negotiated. Origination fees, discount points, and underwriting fees are charged by the lender and sometimes can be reduced or waived, especially if you have good credit or a large down payment.
Ask your lender directly: "Which of these fees can you reduce or remove?" Some lenders will negotiate to win your business. Others will not. If a lender refuses to budge on any fees, that is useful information—it tells you how much they value your business and whether another lender might offer a better deal.
Avoid lenders who charge unusual or unexplained fees, or who pressure you to decide quickly. Legitimate lenders give you time to review the Loan Estimate and compare it to other offers. If a lender rushes you or refuses to explain a fee, move on.
Understand points and whether paying them makes sense for you
Discount points are an upfront fee you pay to lower your interest rate. One point costs 1% of the loan amount and typically lowers your rate by 0.25%. If you borrow $300,000, one point costs $3,000 and might lower your rate from 6.5% to 6.25%.
Paying points makes sense only if you plan to stay in the home long enough to recoup the cost through lower monthly payments. If you pay $3,000 upfront to save $50 per month, it takes 60 months (5 years) to break even. If you plan to sell or refinance in 3 years, paying points is a waste of money. If you plan to stay 10 years or more, points often pay for themselves.
Ask your lender to show you the break-even point for each option: "If I pay one point, how many months until the monthly savings equal the upfront cost?" Use that number to decide. If the break-even is longer than you plan to stay, skip the points and take the higher rate instead.
Frequently Asked Questions
How many lenders should I get quotes from?
At least three. The difference between the cheapest and most expensive quote is often 0.5% or more, which can mean $10,000 to $20,000 over the life of the loan. Getting three quotes takes a few hours and is worth the time. More than five quotes is usually unnecessary and can hurt your credit score from multiple inquiries.
What is the difference between APR and interest rate?
The interest rate is what you pay on the borrowed money. The APR includes the interest rate plus all fees, expressed as a yearly percentage. APR is the more honest number because it shows the true cost of borrowing. Two lenders might quote the same interest rate but different APRs if their fees differ.
Can I negotiate the interest rate itself?
Not directly—rates are set by market conditions and your credit profile. But you can negotiate fees, which effectively lowers your true cost. You can also shop around to find the lender offering the best rate for your situation, or pay points to lower the rate if you plan to stay long enough to break even.
What happens if rates drop after I lock in?
You are stuck with your locked rate unless you paid for a float-down option, which lets you lower your rate if the market drops. If you did not pay for float-down and rates fall, you can refinance later, but that means paying closing costs again. Ask about float-down costs when you lock in so you can decide upfront whether it is worth it.
Should I get pre-approved before I shop for rates?
Pre-approval is useful because it shows sellers you are serious, but it is not the same as rate shopping. Pre-approval tells you the maximum you can borrow; rate shopping tells you the actual rate and fees you will pay. Get pre-approved first to know your budget, then shop for rates once you have found a home and are ready to move forward.