Building the Comparison Spreadsheet With Me
We spent last session on junk fees and how to push back on them. Now we put all of it to work in one place, because knowing what to look for on one loan estimate doesn't help much if you can't line it up against the other two sitting next to it.
I'll walk you through the actual spreadsheet I built for the American Fork house in 2006. Nothing fancy. Tamra teased me at the time, said I was treating a mortgage like a science fair project. It saved us about eleven thousand dollars over the life of the loan. I still bring it to class. I'll bring it to yours.
Why a spreadsheet and not just three folders on the counter
Because loan estimates are laid out to be read one at a time, not side by side. Every lender's PDF looks a little different, uses a little different order, and your brain won't naturally hold three of them at once and spot the six-hundred-dollar difference in section B. A spreadsheet forces the comparison. That's what it's for. Not clever Excel — just refusing to let the format hide the number from you.
The setup
Three columns across the top, one for each lender. Get three loan estimates on the same day, same rate lock period, same loan amount and same purchase price assumption, or the comparison is fake. Worth writing down: get one estimate on a Tuesday and another two weeks later after the market moved, and you're not comparing lenders, you're comparing timing — and you'll draw the wrong conclusion.
Down the side, one row for each of these:
- Interest rate
- Loan term
- Monthly principal and interest
- Property tax escrow (should be close to identical, it's the county, not the lender)
- Homeowners insurance escrow
- PMI, if you're under 20 percent down
- Origination fee
- Underwriting fee
- Processing fee
- Any "admin" or "application" fee — flag these in a different color, we talked about why last time
- Title fees
- Total cash to close
- Total monthly payment, all in
That last row is the one people skip and the one that matters most. A lender can quote you a beautiful rate and bury the cost somewhere in the fees, and the only way you catch it is by looking at the whole payment and the whole closing number, not the headline rate.
What happens when you actually build it
Put three lenders in three columns and watch. Usually two are close, within a hundred dollars a month of each other, and one is meaningfully worse — either in monthly payment or in cash to close. Sometimes the worst one has the best advertised rate. That's the lesson right there. The rate is bait. The spreadsheet is what tells you the truth.
Same opinion again, because it matters here more than anywhere else in this course: shop the lender, always. Three loan estimates, same day, side by side. Most people don't do this. They take the first number from whoever their real estate agent recommends, or whoever their cousin used, and never find out what it cost them not to check. I found out. That's a big part of why I'm standing here.
A story about what "done" actually means
I mentioned pre-qualified versus pre-approved versus cleared to close a few lessons back — the ward party where I spent forty minutes at the folding table with a young couple who thought pre-approved meant they were finished. The spreadsheet has the same trap built in. A number in a column looks final. It isn't. Every one of those loan estimates is a snapshot, good for the day it was pulled, tied to a rate lock that expires, tied to a loan amount that might shift if your offer does. Don't let the tidiness fool you into thinking you're locked in just because it's organized. Organized and final are two different things.
A caution while you're doing this
Don't take verbal numbers over the phone. Get the actual document, the real form, because lenders are required to give you a standardized loan estimate and that standardized form is the only way you're really comparing apples to apples. If someone gives you a verbal quote and resists sending the paperwork, that alone tells you something.
Doing this at home
You don't need anything special. A blank spreadsheet, or even a piece of paper with three columns if that's more your speed, works fine. What matters is the discipline: pull the same-day estimates and put every fee in the same row across all three. I've run this math enough times now to trust the process more than I trust any single lender's reputation, good ones included. The spreadsheet doesn't care whose cousin recommended who.
Before next time: if you can, request loan estimates from two lenders this week, just to see the document itself, even if you're not ready to lock anything. Get comfortable reading the form now so you won't be reading it for the first time under a deadline.