What is an APR on a mortgage?

APR stands for Annual Percentage Rate. It reflects the total yearly cost of the mortgage including the interest rate, points, and lender fees expressed as a single percentage. Because it captures more costs than the stated interest rate alone, comparing APRs across lenders gives a more accurate apples-to-apples comparison of total loan cost.

Home » Mortgage Shopping Simplified

Written by

Brian McKay

| Fact checked | Published May 3, 2023 | Updated September 28, 2026 | 5 min read

How to Shop for a Mortgage: Rates, Terms, and Fees Explained

Q: How do I shop for the best mortgage rate?

Get quotes from at least three to five lenders, including banks, credit unions, and online lenders. Compare the same loan type, term, and amount across all quotes. Focus on the APR rather than just the stated interest rate, as APR includes fees and gives a more accurate picture of the true cost of the loan.

Q: What are mortgage points?

Mortgage points (also called discount points) are fees paid to the lender at closing in exchange for a lower interest rate. One point equals 1% of the loan amount. Whether paying points makes sense depends on how long you plan to stay in the home, the longer you stay, the more likely the interest savings will outweigh the upfront cost.

Q: What is a mortgage rate lock?

A mortgage rate lock is a lender's commitment to honor a specific interest rate for a defined period (typically 30 to 60 days) while your loan is being processed. Locking protects you from rate increases during underwriting. If rates fall after you lock, you may be able to negotiate a float-down provision, but this depends on the lender.

Q: Should I use a mortgage broker or go directly to a lender?

Both approaches have merit. Going directly to a lender gives you direct control and avoids broker fees. A mortgage broker has access to multiple lenders simultaneously and can shop your application more broadly, which can be advantageous if your financial profile is complex or if you want to compare many options quickly. Ask any broker upfront what their fee structure is before engaging their services.

Shopping for a mortgage means getting Loan Estimates from at least three to five lenders for the same loan type, term and amount, then comparing the APR, points and total closing costs rather than the interest rate alone, negotiating fees, and locking the rate in writing once you choose. The MonitorBankRates national average is 7.18% on a 30 year fixed mortgage and 6.73% on a 15 year fixed, verified by MonitorBankRates as of October 13, 2026.

30 year fixed

7.18%

avg rate

15 year fixed

6.73%

avg rate

MonitorBankRates national averages as of October 13, 2026, computed from rates published by more than 8,000 banks and credit unions.

Key facts

Lenders to Contact: At least 3 to 5 for comparison
Key Metric: APR, not just interest rate
Rate Lock Period: Typically 30 to 60 days
Fees Are Negotiable: Always ask for a better deal

Shopping for a mortgage is one of the few financial transactions where a small amount of comparison effort can save you tens of thousands of dollars. Yet most homebuyers contact only one or two lenders before committing, leaving significant savings on the table. Mortgage rates, fees, and terms vary meaningfully between lenders on any given day. This guide walks you through a straightforward process for finding and securing the best mortgage deal available to you.

Where to Find Mortgage Lenders

Mortgages are available from several types of institutions, each with different strengths:

Banks and thrift institutions: familiar brands with full banking relationships, but not always the most competitive rates
Credit unions: member-owned institutions that often offer lower rates and fees for qualified members
Mortgage companies: specialists whose entire focus is originating home loans, often with a wide range of products
Online lenders: typically lower overhead translates to competitive rates; fully digital application process
Mortgage brokers: intermediaries who shop your application across multiple lenders simultaneously

Contact at least three to five lenders directly, or use a rate comparison site to get an initial market view. Do not rely on a single quote; lenders price loans differently, and the difference between the best and worst rate you could receive can be substantial.

What to Compare Between Lenders

Compare APR, Not Just Rate: The stated interest rate tells only part of the story. The Annual Percentage Rate (APR) includes the interest rate plus points, origination fees, and other lender charges expressed as a single annualized figure. Always compare APRs across lenders for an accurate cost comparison.

When evaluating competing mortgage offers, ask each lender about:

Current interest rate and whether it is the lowest available today
Whether the rate is fixed or adjustable, and how and when it can change
The loan's APR
Points required and their dollar cost at closing
Origination, underwriting, and processing fees
Estimated closing costs in total
Down payment requirements and whether PMI is required
Rate lock options and costs

Understanding Points and Fees

Mortgage points (discount points) are upfront fees paid to the lender in exchange for a lower interest rate. One point equals 1% of the loan amount. On a $400,000 loan, one point costs $4,000. Whether paying points makes financial sense depends on how long you plan to stay in the home. Divide the cost of a point by the monthly savings it generates to find your break-even period. If you stay longer than that, points pay off.

Always request that all fees be quoted in writing in dollar amounts. Fees in percentage terms are harder to compare across lenders with different loan structures. Some fees are negotiable; ask each lender directly if they will waive or reduce origination or processing fees.

Down Payments and PMI

Most conventional loans require a down payment of at least 20% to avoid private mortgage insurance (PMI). PMI protects the lender if you default and adds $50 to $200 or more per month to your payment depending on the loan size and your credit profile. Government-backed loans have different requirements:

FHA loans require as little as 3.5% down but require mortgage insurance for the life of the loan in most cases
VA loans require no down payment for eligible veterans and active-duty service members
USDA loans offer no-down-payment options for eligible rural and suburban properties

Negotiate for the Best Deal

Once you have quotes from multiple lenders, use them as negotiating leverage. Lenders and brokers can often match or beat a competing offer. Ask directly: "Can you beat this rate?" or "Will you waive this origination fee?" The worst they can say is no. Document any changes in writing before proceeding.

Watch for Fee Shifting: When a lender lowers the rate, verify that fees have not increased correspondingly. And when they lower fees, confirm the rate has not risen. Review the full Loan Estimate (rate, APR, and itemized fees) any time a change is made.

Locking In Your Rate

Once you select a lender and your application is approved, obtain a written rate lock that specifies the locked rate, the lock period (typically 30 to 60 days), and any points included. Rate locks protect against increases while your loan is being processed. If rates fall after you lock, ask whether the lender offers a float-down provision that lets you capture a lower rate before closing.

Compare Mortgage Rates

View current rates from lenders nationwide and find the best deal for your home purchase or refinance.

Mortgage Rates Mortgage Calculator

Frequently Asked Questions

How do I shop for the best mortgage rate? ▼

Get quotes from at least three to five lenders and compare the APR (not just the stated interest rate) along with total closing costs and fees for the same loan type and term. Rate comparison sites can give you a fast market overview. Then contact lenders directly to negotiate and get written Loan Estimates before committing.

What is APR on a mortgage? ▼

APR is the Annual Percentage Rate. It reflects the total yearly cost of the mortgage including the interest rate, points, and lender fees expressed as a single percentage. Because APR captures more costs than the stated rate alone, comparing APRs gives a more accurate apples-to-apples comparison of true loan cost across lenders.

What are mortgage points? ▼

Mortgage points are upfront fees paid to a lender in exchange for a lower interest rate. One point equals 1% of the loan amount. Whether paying points is worthwhile depends on how long you stay in the home. Divide the point cost by the monthly savings it generates to find your break-even period.

What is a mortgage rate lock? ▼

A rate lock is a lender's commitment to honor a specific rate for a set period (typically 30 to 60 days) while your loan is processed. Get the lock in writing with the rate, period, and any associated points clearly stated. Ask about float-down provisions if you want the ability to capture lower rates before closing.

Should I use a mortgage broker or go directly to a lender? ▼

Both approaches work. A broker shops your application across multiple lenders simultaneously, which can be advantageous if your profile is complex or if you want broad market coverage quickly. Going directly to lenders gives you full control and avoids broker fees. Ideally, do both; get quotes from a broker and directly from two or three lenders to compare.

This article is for general information and is not financial advice. Rates shown are market averages, not offers; terms and fees are set by each institution.