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As a homebuyer, one of the most important steps in securing a mortgage is making sure your lender is being transparent and fair with their fees. Many buyers don’t realize that lenders can structure rates, fees, and closing costs in different ways—and without the right questions, you might end up paying thousands more than necessary.
Here’s a clear, homeowner-friendly guide you can share with your audience to protect them from unnecessary charges and help them shop for their mortgage confidently.
1. Request a Loan Estimate (LE)
A Loan Estimate is the most important document a buyer should ask for. It’s a standardized form that breaks down:
- Interest rate
- Monthly payment
- APR (Annual Percentage Rate)
- Closing costs
- Escrow/impound requirements
- Cash needed to close
- Any discount points being charged
Why it matters: Because every lender uses the exact same format, it allows buyers to compare offers fairly.
2. Ask for a Breakdown of Lender Fees
Lenders control some fees directly. Ask them to itemize:
- Origination fee
- Underwriting fee
- Processing fee
- Application fee
- Discount points
Tip: Request that lender fees be separated from third-party fees so it’s easier to compare one lender’s true cost against another.
3. Request the Pricing Quote or Rate Sheet
This shows how your rate is being priced, including:
- The par rate (rate with no points)
- Costs/credits associated with different rates
- Whether you are being charged points to get your interest rate
Why it matters: Some lenders quote a low rate but quietly add points. Others quote a higher rate to give a lender credit. Transparency eliminates surprises.
4. Review All Third-Party Fees
These fees don’t come from the lender, but buyers should still know what to expect:
- Appraisal
- Title search and title insurance
- Attorney fees (required in New York)
- Credit report
- Flood certification
- Survey (when needed)
While these fees should be similar across lenders, major differences may signal padding or inaccurate estimates.
5. Understand the Rate Lock Terms
Buyers should ask:
- How long is the lock period? (30, 45, 60 days?)
- Is there a lock fee?
- When is the rate officially locked?
- Is there a float-down option if rates drop?
Rate lock rules affect the buyer’s final payment and out-of-pocket costs.
6. Ask About Mortgage Insurance Options (If <20% Down)
If the buyer needs PMI, ask:
- What type of PMI is being used? (borrower-paid, lender-paid, single premium)
