How can I compare loan offers?
It's helpful to lay 2 or more Loan Estimates side by side and compare them page by page. But there's a shortcut to comparing loan offers: the 5-year cost.
Look at Page 3, the "Comparisons" section. It shows 2 numbers that cut through the clutter when you compare mortgage offers:
- Total loan-related payments for the first 5 years: closing costs plus principal, interest and mortgage insurance that you'll pay in the first 60 months. The lower, the better.
- Principal paid off in the first 5 years. The higher, the better, because the more principal you pay off, the faster you gain equity.
The "Comparisons" section has 2 other numbers:
- Annual percentage rate, or APR. The lower, the better.
- Total interest percentage, or TIP. The lower, the better.