Back to the Mortgage Rate Shopping Guide
Who pays the mortgage broker?
The borrower or the lender can pay broker compensation, depending on how the loan is structured. Ask who pays for the option you are reviewing and compare the rate, lender charges, credits, and cash to close on the same assumptions. The compensation label alone tells you little about which offer costs less.
Read the Loan Estimate in order
On page 1, confirm the loan amount, interest rate, term, and whether the rate is locked. On page 2, start with Section A for origination charges and any points. Check Section J for lender credits, then check the cash-to-close calculation separately. Ask the broker to point out any charge you pay directly and explain whether the pricing you were quoted assumes lender-paid compensation. Compare the final Closing Disclosure with your Loan Estimate before closing.
Put payment and upfront charges together
Suppose Offer A costs $2,000 more upfront and has principal and interest that is $80 lower per month. The simple break-even is 25 months. After 18 months, the payment difference adds up to $1,440. After 36 months, it adds up to $2,880. The example isolates two differences. Your own comparison should also account for remaining balance, mortgage insurance when applicable, and fees that are financed.
What should you ask your broker?
Ask who pays the broker on this quote, what Section A charges you pay directly, and what happens to the rate or lender credit if the pricing structure changes. Ask for comparable written numbers using the same loan amount and lock period. If you see a lender credit, ask which costs it offsets and compare the monthly payment with the alternative.