To compare closing costs between lenders, start with page 2 of each Loan Estimate and separate costs the lender controls from costs tied to the property, government charges and third-party services.
Two lenders can estimate very different total closing costs even when their actual lender pricing is similar.
That is why total closing costs alone can be a misleading way to compare mortgage loan offers.
The exact expenses also depend on the mortgage program, so understanding closing costs by loan type can explain differences that have little to do with the lender.
Closing Cost Comparison Basics
| Loan Estimate Section |
What It Contains |
Compare Between Lenders? |
Can You Shop or Negotiate? |
| Section A |
Origination charges and points |
Yes, closely |
Lender charges may be negotiable |
| Section B |
Required services you cannot shop for |
Yes |
You generally cannot choose the provider |
| Section C |
Required services you can shop for |
Yes, but shop providers separately |
You can generally shop for eligible providers |
| Section E |
Taxes and government fees |
Verify rather than treating them as lender pricing |
Generally set by government requirements |
| Section F |
Prepaids |
Check assumptions |
Usually not a lender fee |
| Section G |
Initial escrow payment |
Check assumptions |
Usually not a lender fee |
| Section J |
Total closing costs and lender credits |
Yes, with context |
Lender-credit structure can vary |
A standardized Loan Estimate makes these categories visible in the same place for each lender.
Use Page 2 of the Loan Estimate
Page 2 is the main closing-cost comparison page.
Sections A through D make up Loan Costs. Sections E through H show Other Costs, followed by lender credits and Total Closing Costs in Section J.
The CFPB recommends comparing both Origination Charges and Services You Cannot Shop For across Loan Estimates.
Those sections are useful because the lender either charges the cost directly or controls the required provider.
But do not stop there.
A complete Loan Estimate comparison should also account for services you can shop for, government charges, prepaids, escrow funding and lender credits.
Section A Is the Clearest Lender-Fee Comparison
Section A contains Origination Charges.
These are upfront costs associated with making the mortgage.
Depending on the lender, they can include origination, application, underwriting, processing, verification and rate-lock charges.
The CFPB recommends comparing the total origination charges rather than focusing too heavily on how individual fees are labeled.
One lender might charge a single $1,500 origination fee.
Another could show a $500 processing fee and $1,000 underwriting fee.
The labels are different, but the total is the same.
Example: Compare the Total, Not the Fee Names
| Section A Charge |
Lender A |
Lender B |
| Origination fee |
$1,500 |
$0 |
| Processing fee |
$0 |
$500 |
| Underwriting fee |
$0 |
$1,000 |
| Total before points |
$1,500 |
$1,500 |
Neither lender has a cost advantage in this simplified example.
The fees have simply been itemized differently.
Separate Discount Points From Other Fees
Section A can also include discount points.
These need to be treated separately because they affect the interest rate.
One point equals 1% of the loan amount. Paying points generally means paying more at closing for a lower rate.
If one lender's Section A total is $5,000 and another's is $1,500, first check whether the difference comes from points.
The first lender could be charging $3,500 in points to produce a lower interest rate.
That is a different pricing structure rather than simply a more expensive lender.
Comparing points and lender credits separately helps isolate the actual lender-fee difference.
Section B Contains Services You Cannot Shop For
Section B lists required services for which the lender selects the provider.
Common examples include the appraisal, credit report and flood determination.
Because you cannot independently choose a cheaper provider for these items, Section B is useful when comparing lenders.
The CFPB specifically recommends comparing the total cost of this section across Loan Estimates.
Some program-related charges can also appear here.
For example, the CFPB notes that upfront mortgage insurance or funding fees associated with FHA, VA or USDA financing can appear in Section B.
Those program charges should not be mistaken for an ordinary lender fee.
Escrow and Prepaids Are Not Lender Fees
Sections F and G can make one Loan Estimate look substantially cheaper than another.
But these sections generally do not represent lender pricing.
Section F includes prepaids such as homeowners insurance premiums, prepaid interest and certain property taxes.
Section G shows the initial amount placed into your escrow account.
Prepaid interest can vary simply because lenders used different assumed closing dates.
Insurance can differ because the estimates use different premiums.
Escrow deposits can vary based on tax due dates, insurance timing and the amount needed to establish the account.
The actual escrow requirements also depend partly on the mortgage program and transaction.
Example: The Lower Total May Not Be Cheaper
Suppose two lenders quote identical loan terms and lender charges.
| Cost |
Lender A |
Lender B |
| Section A and B costs |
$3,500 |
$3,500 |
| Prepaids and escrow |
$4,000 |
$5,500 |
| Total shown in example |
$7,500 |
$9,000 |
Lender A appears $1,500 cheaper.
But if the difference comes entirely from Lender A estimating property taxes or insurance too low, there is no $1,500 lender savings.
The underlying obligation still has to be paid.
Ask why the escrow and prepaid assumptions differ before using them to rank the offers.
Shop the Third-Party Costs You Control
Section C includes services required for the mortgage for which you are permitted to shop.
Title and settlement services commonly appear here.
The CFPB says borrowers can shop for the services listed in Section C of page 2.
Your lender must also provide a written list of service providers for these items.
You can generally choose a provider from that list and may be able to select another provider if the lender agrees to work with it.
Title practices, customary charges and who selects or pays for particular services can vary by state and transaction.
Other costs associated with buying a home can include surveys, pest inspections and home inspections.
A home inspection is generally part of the purchase transaction rather than a lender origination charge. Whether one is required also depends on the circumstances and loan program, as explained in home inspection requirements by loan type.
Government Fees Should Not Decide the Lender Comparison
Section E includes taxes and other government fees.
Recording charges, for example, are assessed by state or local government agencies for recording the deed, mortgage and related documents.
Transfer taxes can also appear in this section.
These amounts can depend on the location, transaction and who is responsible for the charge.
A lender does not create a competitive advantage by estimating a government charge below the amount ultimately due.
If two Loan Estimates show materially different Section E costs for the same transaction, investigate the assumption rather than automatically choosing the lower estimate.
Closing Costs Differ by Mortgage Program
Some closing costs come from the loan program itself.
They should be separated from ordinary lender fees when comparing offers.
| Loan Type |
Program-Related Cost to Watch |
| Conventional |
Private mortgage insurance may apply depending on the transaction |
|
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