After that, you want to repeat the same scenario with three to five lenders. Most of the interest rates you are quoted should be within a ¼ point or so. You will probably get one guy whose rate is considerably lower than the rest; this is usually the guy that is trying to low-ball you. If you follow through and get a full quote on a Good Faith Estimate his closing cost will almost always be considerably higher. I recommend discarding this lender from consideration; they are usually the tricksters you want to avoid.

The last step is to compare closing costs of the two top lenders you feel comfortable using. Ask them to send you a "Good Faith Estimate" (GFE) and do not accept anything that does not have those three words at the top of the page. The GFE is a legal document that is part of their RESPA package; most lenders have to re-disclose this document before closing if the numbers change. For whatever reason, if the lender refuses to send you this document ahead of time, next!

Once you have these GFE’s in your hand just simply compare the closing costs, (How to figure closing cost). If their rates are comparable the lender with the lowest closing costs wins. If you want to chip away at their profit you can play each lender off the other until you are certain you have your best deal. Use caution here, if you get a lender to work on too little profit and your deal hits a "bump in the road" they may simply turn the loan down. Believe it or not loans are a lot of work, and if the loan officer is not being fairly compensated SHE may very well say "next!"

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