Shop the Loan price not the rate --what does that mean?

After my nearly 40 years in lending, there is one constant I can attest to.  The bigger the lender the higher their loan price!  What exactly is the loan price?  It's the combination of the rate and lender fee tied to that rate.  For example on a given day a rate might be 5% with $3k in lender fees, or 5.50% with $1k in lender fees.  The higher rate means less lender fees, while a lower rate has higher lender fees.

Lenders who play the rate game know nearly everyone focuses on the rate and/or the annual percentage rate (APR).  Because that's what the online pundits tell people to do!  But only paying attention to the rate allows these unscrupulous lenders to use misleading tactics to trick and confuse by quoting low rates and APRs, while minimizing details on the lender fee you would pay for that rate.

To give you an example, here is a legitimate 30 year fixed conventional loan rate offering from a well known lender (as of April 2, 2026) for a $400k loan amount

• 5.99%  zero lender fees monthly PI $2398 APR 6.034%

• 5.50%  $7000 lender fees PI $2271 ($127 less) 5.696% APR

At first glance, everyone would think a 5.5% rate is the best way to go with a lower rate and APR----but... that $7k in lender fees to get that half percent cheaper rate will take 55 months (at $127 a month) before taking the lower rate option pays for itself.  This is called the "break even" of the loan price.  With the idea rates are likely to improve in the next couple of years offering a lower rate to refi to, that extra lender fee paid for the lower rate is wasted money.

And to explain further--here are my rates for the same loan:

• 5.99% -- 5.99% APR -$3k lender credit back to you for other closing costs (I'm $3k lower on the lender fee than this "well known" lender)

• 5.50%  $3k in lender fees 5.603% APR (I'm $4k less than this lender for the same rate)

So you see, just concentrating on the rate and APR is misleading.  And

the difference in loan pricing from a well connected mortgage broker who owns his own company (like me) with much less overhead, is pretty substantial--and can save you money.  Some super lenders like Rocket, NewDay, Loan Depot, Fairway Mortgage, among others, have even worse loan pricing than what's displayed above.  They have huge overhead with massive ad budgets, and use their name recognition as a bludgeon to get borrowers to accept their loan pricing.

What's the best way to rate shop?

Most of the tips on how to shop for a mortgage rate these days are no longer accurate.  It's based on the old idea that rates move slowly, with little change in a day or two, allowing a shopper to gather info from a couple of lenders during that time and make a decision by weeks end.  Technology has changed all that.  Rates move several times a day and a quote from one lender at 9 am could be completely different by afternoon, thus comparing lenders accurately is nearly impossible.

Not to mention many lenders and loan officers are not 100% truthful.  They low ball rate quotes to give you the erroneous impression they are far lower than every other lender out there, knowing it will likely be several days before you circle back to them.

So what's the solution for accurate rate shopping?

Talk to and then work with a well connected mortgage broker (like me), who will show you how rate, APR and the loan price all fit together.  That way you can make the best choice for your situation.  And save thousands of dollars in the process!