Quick answer: Compare quotes using the same loan type, lock period, loan amount, down payment, credit assumptions, and timing. Then compare the rate, points or credits, lender-controlled fees, cash to close, and expected break-even period.
Points versus lender credits
Discount points generally mean paying more upfront for a lower rate. Lender credits generally reduce some upfront costs in exchange for a higher rate. Neither is automatically good or bad.
Calculate a simple break-even period
Divide the additional upfront cost by the estimated monthly savings. If an option costs $3,000 more and saves $75 per month, the simple break-even period is 40 months. Your expected time in the loan matters.
Use the Loan Estimate
The standardized Loan Estimate makes comparisons more useful. Review the CFPB Loan Estimate forms and explanations.
Questions worth asking
- Is the rate locked, and for how long?
- Are discount points included?
- Which fees are controlled by the lender?
- What assumptions could change?
- What is the no-points alternative?
Read more mortgage insights or ask Jeff to compare two scenarios.
Rates and pricing can change without notice and depend on loan-specific factors. This is general education, not a rate quote.