Know what you're really paying.

Interest rate: Your rate affects the principal-and-interest portion of your monthly mortgage payment. Generally, a lower rate means a smaller payment and less interest over time. APR is different: it reflects your interest rate plus certain loan costs.

Discount points: These are upfront charges that can help you obtain a lower interest rate. One point equals 1% of your loan amount. For example, one point on a $400,000 loan costs $4,000. Paying points can make sense, but the lower rate isn't automatically the better deal.

Lender fees: Origination, underwriting, processing and broker fees may appear under different names. Compare the total charges and which services you're actually paying for, not just the fee labels.

Lender credits: A credit can reduce your costs at closing, sometimes in exchange for a higher interest rate. It may be helpful when you want to conserve cash, but the trade-off could mean paying more each month.

What matters: Compare the loan amount, term, rate-lock status, rate, discount points, fees, and lender credits together. Consider how long you expect to keep the mortgage. A loan with higher upfront costs may take years to break even through a smaller monthly payment.

Our tip: Ask, “How much more would I pay upfront, how much would I save each month, and when would those savings catch up?”

Property taxes: Lenders may use outdated assessments or estimates. Property taxes are determined by local taxing authorities, not by your mortgage lender. If two Loan Estimates show different taxes for the same home, that doesn't mean one lender has better loan terms. The figures may simply have been estimated differently, and taxes may change after a sale or reassessment.

Homeowners insurance: This is often an estimate because you typically shop for and choose the policy that fits your needs. The actual cost depends on your coverage, insurer, and property, not simply which lender prepared the estimate.

Prepaids & escrow (Sections F & G): These include costs paid in advance and funds set aside for future bills. Section F may include the first year's homeowners insurance and prepaid interest; Section G collects initial escrow reserves. The number of months depends on the expected closing date, when taxes and insurance are due, and applicable escrow rules.

Our tip: Ask whether the taxes, insurance, and number of months collected at closing have been verified. A lower estimate can make both the monthly payment and cash needed at closing appear lower without creating real savings.

Seller credits: A seller may agree to contribute toward allowable closing costs. The credit should agree with your purchase contract and applicable limits. When comparing two estimates for the same purchase, a larger seller credit isn't an improvement offered by that lender.

Lender credits: These are amounts the lender contributes toward closing costs. They can reduce the cash you need upfront, but may be tied to a higher interest rate. Compare the credit and rate together.

Adjustments & other credits: These can include legitimate transaction adjustments, such as prorated taxes. An unfamiliar or unusually large number deserves an explanation. It can make cash to close look dramatically different even when the actual mortgage costs haven't changed.

Refinance payoffs: Your old mortgage payoff is usually not the same as your statement's principal balance because interest accrues through the payoff date. Other charges or outstanding amounts may apply. For example, a $300,000 principal balance could require $302,000 to pay off, depending on timing and charges. An underestimated payoff can make your estimated cash needed look too low—or cash back look too high.

Our tip: Ask your lender to explain where every credit comes from and how any refinance payoff was calculated. A lower cash-to-close figure doesn't necessarily mean a less expensive loan.

Principal & interest (P&I): This is the amount you pay toward the loan balance and interest each month. It depends on your loan amount, interest rate, and term.

Mortgage insurance: On conventional loans, private mortgage insurance (PMI) is often required when your down payment is below 20%. PMI pricing can differ between lenders or insurance providers, even for otherwise similar loans. Some lenders have access to discounted mortgage-insurance pricing. A lower PMI figure may be meaningful—confirm that both quotes use comparable coverage and assumptions. FHA and VA loans have different insurance or funding-fee structures.

Estimated escrow: If you have an escrow account, your monthly mortgage payment generally includes a collection for property taxes and homeowners insurance. The servicer holds these funds and pays the bills when they come due. These estimates may change over time.

Estimated taxes, insurance & assessments: This line is not an extra amount to add on top of your estimated escrow. It summarizes property-related costs, including costs already collected through escrow and costs you may have to pay separately, such as HOA dues.

Example: If estimated monthly escrow is $400 and HOA dues are $150 per month, “Estimated Taxes, Insurance & Assessments” might show $550. The $400 is already in your mortgage payment; the $150 HOA bill is generally paid separately. The Loan Estimate's Estimated Total Monthly Payment typically does not include HOA dues paid outside escrow.

Our tip: Compare P&I, mortgage insurance, property taxes, homeowners insurance, and HOA dues separately. A lower displayed payment may simply omit a separate expense or use a lower estimate.