Compare the loan, not just the payment.
A lower monthly payment does not automatically mean lower borrowing cost. Compare two fixed-rate offers for the same loan amount over the time you expect to keep the mortgage.
Mortgage offer comparison
What the comparison counts
Borrowing cost equals interest paid during the selected period plus upfront financing costs minus lender credits. Principal repayments reduce your loan balance; they are shown separately rather than treated as interest expense. Cash paid includes both principal and interest payments plus net upfront costs. It is not a cash-to-close quote: down payment, escrow deposits and property-related costs are excluded.
Use the same principal and holding period for both offers. Enter the note interest rate, not APR: APR includes costs and is not the rate used to calculate the scheduled payment. Enter fees and points paid at closing rather than financed into the balance. Credits cannot exceed the costs entered. If you plan to keep a loan beyond its term, the comparison stops its payments at payoff, while the other loan may continue.
Check your Loan Estimates
The Consumer Financial Protection Bureau explains comparing interest and fees separately from principal repayment. Check lender-controlled charges and credits against your actual documents. Taxes and insurance are not lender discounts; lower estimates for those items do not make one loan cheaper.
Limits of this fixed-rate model
It assumes monthly payments, an unchanged rate and no extra principal payments. It excludes mortgage insurance, taxes, insurance, HOA dues, prepayment charges, discounting, investment opportunity cost, refinancing costs and adjustable or interest-only products. If those differ between offers, this comparison is incomplete. A lender's ability to close and the actual loan terms matter alongside the estimated cost.
Changing the horizon can reverse which offer has lower cost because upfront points are paid immediately but rate savings build gradually. Try your likely move date and a shorter alternative; do not assume you will keep the mortgage for its full term. These are hypothetical estimates, not lending or personal financial advice.