Mortgage Rates:
Putting Lenders in Competition
Mortgage shopping can be overwhelming, but the best way to save is by putting lenders in competition for your loan.
Types of Mortgage Lenders
Traditional Lenders
Big and Regional Banks – Large, established institutions with many financial services and a large footprint.
Community Banks & Credit Unions – Often overlooked, but can have some of the best rates. Credit unions, in particular, prioritize lower fees and better terms for members.
Online Lenders
Fast & Digital-First – Pre-approvals (often excessive in notional) in minutes and a streamlined application process.
Rate Caveats – Convenience ≠ best rates. Online lenders may not offer the lowest rates, so shopping around is key.
Support at Closing – Unlike traditional banks, online lenders often lack hands-on guidance, which can be crucial for first-time buyers.
Mortgage Brokers
Pay to Shop – Brokers compare multiple lender offers for you, but they charge fees—either paid by you or the lender. Always ask upfront about costs.
Factors in getting a loan
Credit Score – Sometimes lenders have certain thresholds for rate improvements that they'll openly share. It doesn't hurt to ask if you're close enough to try to improve it prior to a formal application.
Debt-to-Income Ratio (DTI) – The percentage of income spent on debt. Lower DTI = better rates.
Loan-to-Value (LTV) Ratio – Borrowing more vs. home value increases risk. Larger down payments lower rates.
Income & Employment Stability – Steady income & job history show lenders you can make payments, improving approval odds and rate offers.
Loan Type – Fixed, adjustable (ARM), FHA, VA, and jumbo loans all have different risk levels.
Property Type & Occupancy – Second homes and investment properties often come with higher rates.
Market Interest Rate Trends – Rates fluctuate based on inflation, Federal Reserve policy, bond markets and more.
Discount Points & Lender Pricing – You can buy down your rate with discount points.
Other Factors to Consider – Loan term length, Private Mortgage Insurance (PMI), rate lock periods, prepayment penalties, escrow requirements, and lender-specific pricing models.
The importance of competition
Shopping multiple lenders can save thousands over the life of your mortgage. According to Freddie Mac:
• One extra rate quote saves borrowers $600–$1,200 per year in interest.
• Over 30 years, that adds up to $18,000–$36,000 in savings.
• In higher interest rate environments, the savings increase even more, making comparisons even more important.
Even small rate differences matter. On a $400,000 mortgage, a 0.25% lower rate saves over $1,000 per year, or $30,000 over 30 years. The more rates you put incomp, the more money you save.
Typical mortgage timeline
Shopping for a Mortgage (1-2 Weeks):
Get pre-approvals from multiple lenders and compare offers. Soon, incomp will automate this process for you.
Making an Offer (1 Week):
Once pre-approved, you can confidently make an offer on a home within your budget.
Your lender will provide a loan estimate detailing the terms and costs of your mortgage.
Underwriting and Approval (3-6 Weeks):
Submit necessary documentation, including income verification, tax returns, and credit history.
The lender assesses your risk and verifies the property details.
Closing (1 Week):
Review the final loan terms, pay closing costs, and sign the necessary paperwork.
How incomp levels the playing field
We're building a platform that puts mortgage lenders in competition for Millennial and Gen Z borrowers. Compare multiple lender offers in one place—without the legwork, sales calls, repetitive information share, etc.. Sooooon.