Next, compare the total of all points and lender fees for each mortgage (from section 800 to 813 on the Good Faith Estimate), that is the price of the mortgage. The lender with the lowest cost has the best mortgage rates.
If you are refinancing, you will also need to review the cost of title insurance, closing/attorney, and appraisal. Some large national companies have negotiated excellent rates for these services on your behalf. The company with the lowest combination of points, fees and third party costs for the same rate and product has the best mortgage rates.
Things to Watch Out For
APR is not always accurate, so it should not be used. To get the best mortgage rates, compare current mortgage rates and closing costs.
Good Faith Estimates are just estimates. Many brokers and lenders will give you a low ball estimate, and then after you have paid for your appraisal, they will inform you that the mortgage rate or closing cost have gone up. Look for lenders that guarantee their closing costs up front.
There is nothing wrong with No/Zero Closing Cost Loans. Just be aware that you will be looking at higher mortgage rates in exchange or if you are refinancing, the closing costs could be included in your principal.
Paying higher points and fees will result in lower mortgage rates. For example, at 7% you may have zero points and fees, while at 6% you may have points and fees of $3000. To get the best mortgage rates, you must estimate how long you will have the mortgage. Also, make sure you are comparing current mortgage rates when doing your comparison.