August 3rd, 2015 2:32 PM by Dana Bain
APR can muddy the process of shopping for a mortgage rate. Rather than shop by APR, consider picking a specific rate you want, then shopping for fees at that rate. Or, choose a zero-closing cost mortgage and shop for rates at that zero-fee.
In other words, fix one piece of the puzzle in place, then shop for the other because you can't shop for both at the same time.
As a real-life example, if today's 30-year fixed rate mortgage rate is 3.50% and your quotes from three separate lenders require fees of $1,500, $2,000, and $3,000, it's clear which option is going to be best -- the option with the fewest closing costs.
This is far simpler than trying to compare 3.50% at $3,000 versus 3.625% at $500 versus 3.75% with no closing costs.
Especially because the 3.50% rate may show the lowest APR.
As an another example, if you ask all three lenders for a zero-closing cost mortgage rate at the rates come back at 3.625%, 3.75%, and 3.875%, you'll know exactly which one to choose, too.