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Negotiating Loan Offers Before You Commit to a Mortgage Lender

This guide presents selected U.S. government consumer education from CFPB. References to “we” or “us” in the source material refer to the issuing agency. Source dates and links appear below.

Compare and negotiate your loan offers

Comparing Loan Estimates helps you decide which lender offers the best deal on the loan amount and kind of loan you have selected.

There are several factors to consider when choosing a lender—for example, the cost of the loan, your comfort with the loan officer’s ability to answer your questions, and your confidence that the lender can meet your closing timeframe. Having multiple Loan Estimates can help you negotiate.

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What to do now

Compare the details of your Loan Estimates to see how they stack up against one another.

Use our Loan Estimate Explainer to understand what each offer means for you. Look at:

  • The loan amount.
  • The interest rate. Interest rates can change daily, so a difference in rate between two lenders could be because of market changes for Loan Estimates issued on different days. For adjustable-rate mortgages (ARMs), look at the worst-case scenario if interest rates rise.
  • The monthly principal and interest payment.
  • The monthly mortgage insurance payment (if any).
  • The total monthly payment, including principal and interest, mortgage insurance, and escrow for property taxes and homeowner’s insurance.
  • The upfront loan costs (listed on page 2 in Section D, Total Loan Costs), especially the origination charges.
  • The lender credits (listed on page 2 under Section J, Total Closing Costs).
  • The “cash to close” (listed on page 2). You typically need a cashier's check or wire transfer for this amount at closing.

Compare the upfront lender costs

When comparing closing costs, focus on the fees that vary by lender. Those are the total origination charges in Section A, the services listed in Section B, and lender credits listed in Section J. Origination charges are upfront fees charged by your lender. Lender credits are rebates to offset your closing costs.

Calculate your five-year cost of borrowing

On average, borrowers keep a mortgage for about five years before moving or refinancing. While your situation may be different, figuring out the total dollar amount you pay in interest and fees over five years is a good way to compare loan offers.

  • On page 3 of the Loan Estimate, locate the “In 5 years” line in the Comparisons section. The first number shows you the total dollar amount (including principal) you will pay over five years. The second number shows you the amount of principal you will have paid off after five years.
  • Subtract the second number from the first number, and you’ll get the total amount of interest and fees you will have paid after five years. This is your five-year cost of borrowing.
  • Note: If you’re considering an adjustable-rate mortgage (ARM), keep in mind that the five-year cost assumes that interest rates stay the same. If interest rates go up, your actual cost of borrowing will be higher.

Confirm your loan option and approach to points or credits

If a lender gave you something different than what you asked for, or you want to see other options, it's not too late. You can go back to each of your lenders and ask to see a Loan Estimate that more closely matches your ideal scenario.

Negotiate to get the best deal for you

Negotiating can save you money. Your best bargaining chip is usually having Loan Estimates from other lenders in hand. Often, lenders are willing to match or beat their competitors’ offers. They can also explain why their estimates differ from other lenders. If the lender you feel most comfortable with is charging more, ask them to match what you find elsewhere. Negotiating is best done over a short timeframe after you have a signed purchase contract. If you switch lenders later, talk to the lender to make sure they can close on time.

What to know

Your comparison should focus on numbers that are within the lender’s control

If one Loan Estimate shows significantly lower taxes and insurance, it doesn’t mean that loan is a better deal. Lenders don’t control your taxes and insurance. That’s true for some other costs too. If the following costs aren’t similar, ask your lender why:

  • Escrow amounts for property taxes and insurance (page 1)
  • Taxes and other government fees (page 2, Section E)
  • Prepaids (page 2, Section F)
  • Initial escrow at closing (page 2, Section G)

How to avoid pitfalls

Loans with “no closing costs” aren’t free

Some lenders advertise loans with “no closing costs,” but the catch is the loan has higher monthly payments. Get more details about how no-closing cost loans work.

Stay alert for warning signs

If what a Loan Estimate says is very different from what you discussed with your loan officer, be wary. Ask questions. It could be a simple miscommunication, or it could be a sign that you should consider choosing a different lender.

Visit our sources page to learn more about the facts and numbers we reference.

The process and forms described on this page reflect mortgage regulations that apply to most mortgages.

Fine-tune loan offers

Comparing loan offers

Loan Estimates are just offers — they’re not set in stone. If the loans you’ve been offered don’t fit your needs or are different from what you asked for, don’t hesitate to go back to your lenders and ask for a different option.

What to do now

Confirm your loan option and approach to points or credits

Earlier, you chose a strategy for your loan option and points or credits. If you missed that step, if a lender gave you something different than what you asked for, or if you're not sure you made the right decision, it's not too late.

  • If you're unsure about what your strategy should be, revisit our earlier action steps on loan options, points and credits, and how to select the kind of loan that's best for you.
  • If you think you might be better off with something different than what is reflected on your Loan Estimate, go back to each of your lenders and ask to see a Loan Estimate that more closely matches your ideal scenario.

Consider negotiating

If you feel most comfortable with one lender but another has a better offer, go back to your preferred lender to see what they can do.

  • Your best bargaining chip is usually having Loan Estimates from other lenders in hand.

What to know

Getting Loan Estimates from multiple lenders increases your bargaining power

Multiple Loan Estimates help you understand all your options and give you alternatives if your preferred lender is unable to accommodate your needs.

If you're planning to go back to your lenders to ask for something a little different, use our resources to plan what to ask for

You want to be able to give the lender a good idea of what you're looking for, so the next offer you receive is a better match. Check out these resources:

How to avoid pitfalls

Stay alert for warning signs

If what a Loan Estimate says is very different from what you discussed with your loan officer, be wary. Ask questions and trust your gut. It could be a simple miscommunication, or it could be a sign that you should consider choosing a different lender.

Visit our sources page to learn more about the facts and numbers we reference.

The process and forms described on this page reflect mortgage regulations that apply to most mortgages.

Choose a loan offer

You’ve compared and negotiated your offers. Now it’s time to make a choice and notify the lender.

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What to do now

Contact the lender you choose to tell them that you are ready to proceed with your application

If the lender has given you more than one Loan Estimate, make sure to be clear about which loan you want to proceed with. It’s a good idea to run through the key terms with the loan officer to confirm that everyone is on the same page.

If you haven’t already, consider locking your interest rate

Locking your interest rate protects you in case interest rates go up between now and closing. Some lenders might have already locked your rate at the Loan Estimate stage, but others require you to express your intent to proceed before locking your rate. Check at the top of page 1 of the Loan Estimate to see whether your rate is locked, and until when.

Start gathering and updating your documentation

In the next phase, you’ll submit documentation of your income, assets, and employment and work with your lender as they process your loan application.

What to know

Loan Estimates can expire

If you don’t express your intent to proceed with a particular loan offer within 10 business days from the day the lender sends you the Loan Estimate, the lender can close your application as incomplete. To proceed with that lender later, you might need to start the application process over.

Getting a Loan Estimate doesn’t mean you’re committed to a lender

You’re not committed to a lender until you sign the final closing documents. If you don’t plan to proceed with a particular lender, you can notify the lender or just let the Loan Estimate expire. However, switching lenders means starting the loan process over again, which could delay or endanger your closing.

You could be asked to pay a loan application fee or an appraisal fee to proceed with your application

Application and appraisal fees are often charged when you express your intent to proceed. These fees might or might not be refundable if you decide not to move forward with that loan.

How to avoid pitfalls

Make sure that you can reasonably expect to close before your rate lock expires

If you don’t close before your rate lock expires, even if it’s because of the lender’s processing time, you might have to pay a fee to extend your rate lock. To continue your rate lock, ask the lender what your options are. Can you change to a longer rate lock now? At what cost? What is the lender’s policy on extensions?

Visit our sources page to learn more about the facts and numbers we reference.

The process and forms described on this page reflect mortgage regulations that apply to most mortgages.

Sources and publication details

The federal agency source text is U.S. government work in the public domain. Fynoptic selected, adapted, and formatted it for this guide. No agency endorsement is implied. Follow the linked sources for current program details and the rules applicable to your circumstances.

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