When shopping for a mortgage loan, most people simply look at the interest rate.  If it seems reasonable, then that’s good enough for them and they sign the papers.  Sometimes, however, that approach is no better than taking a stack of twenty dollar bills and lighting a match to them.  The outcome is the same — you have lost money forever.  For one thing, the interest rate really doesn’t tell the whole story.  In addition to looking at the interest rate (yes, it is a major component to the decision), it is also important to also look at all other fees associated with the loan.  Specifically, look closely at origination fees, any processing fees, and closing costs.  Most lenders will provide an estimate document that has all these figures clearly spelled out.  This estimate document gives you the information you need in order to comparison shop the loan figures to other lenders.  Remember, this is a HUGE investment, keeping as much of your money as possible should be your first and highest priority.

A good rule of thumb for the origination fee is about 1.2-1.6%.  Closing costs will generally be in the range of 3-4%.  While these costs could be influenced by the location of the property, anything outside these windows should be considered suspect and investigated throroughly. 

The short version of the concept it this – lenders are in the lending business to make money.  Don’t simply assume they are giving you the best deal to get your business — because, truthfully, they may not be.  Competition, at least in this case, can be a very healthy thing for your bottom line.  Don’t hesitate to ask questions and if you don’t get the answers you need or want, pick up your paperwork and move on to the next lender.  Someone will recognize what you are seeking and give give you the service you deserve.