How to Find the Right Mortgage Lender 

Choosing the right mortgage lender is an important step to navigating the home buying process. Preparing ahead of time will help you to understand your options and make a sound choice.

Start by asking family and friends about their experiences with lenders and mortgage brokers. Then, visit a few in person or over the phone.

Tips for Finding the Best Mortgage Lender

The mortgage lender you choose can make the difference between a high rate or low one, loan approval versus denial and an easy or stressful process. While all mortgage lenders must follow the same basic lending rules, each will offer different products and lending terms, so it is important to shop around before making a decision. This can help prevent future buyer’s remorse and provide you with the best mortgage option for your specific financial situation.

Some of the biggest mortgage lenders include large banks, credit unions and online marketplaces. Additionally, there are independent mortgage lenders that focus solely on home loans and may have more flexible underwriting standards. Lastly, there are government-backed mortgage lenders that can offer competitive rates to qualified borrowers. The type of mortgage lender you select will depend on your needs, including whether you want a fixed or adjustable-rate loan and which fees you are comfortable paying. Choosing the right mortgage lender can save you money and time in the long run.

Types of Mortgage Lenders

There are a variety of mortgage lenders to choose from. They include brick-and-mortar banks, credit unions and online mortgage companies. Also, some lenders focus on one type of loan, such as government-backed loans or offer a range of different products for homebuyers. Then there are mortgage lenders that specialize in working with homebuyers with specific credit needs or who want to consolidate debt.

The main types of mortgage lenders are mortgage lenders, mortgage bankers, wholesale mortgage lenders and mortgage brokers. Mortgage lenders and mortgage bankers fund, originate, underwrite, process and close loans on their own; they typically work directly with buyers or refinancers. In contrast, wholesale lenders don’t work with borrowers but sell their loans to large lending institutions in the secondary mortgage market. These lenders may offer a wide array of mortgage programs and lower rates than some other types of mortgage lenders. However, borrowers might have more difficulty navigating the application process. Also, many wholesale lenders have stringent eligibility requirements.

Key Questions for Mortgage Lenders and Brokers

There are several key questions you should ask any mortgage lender to ensure you’re on the same page. For example, you should ask whether there are any additional fees beyond loan costs like origination, processing and underwriting. You should also find out if the lender offers a variety of loan programs, including conventional loans and government-backed FHA or VA mortgages.

You should also get a firm understanding of how much the loan will cost and what your monthly payments will include, which includes property taxes and homeowner’s insurance. You should also find out if the mortgage lender requires an escrow account and how you’ll handle payment shortfalls or overpayments.

You should also find out if the lender charges a prepayment penalty and how much it is. These penalties can be expensive and make it difficult to sell or refinance a mortgage. A lender that does not charge this fee may be a good choice for some buyers.

Getting Started

A mortgage lender is a critical part of the home-buying process. Choosing the right one is a complex and important decision that can make or break your house hunt. Before a lender starts tossing around terms, it is wise to do some upfront research so that you can understand what options are available and what is involved in the mortgage approval process.

The best way to start is by shopping rates with lenders, credit unions, local banks, online lenders and mortgage brokers. It is also helpful to compare fees, as these can vary between lenders. Be sure to line up down payments, interest rates and fees as close as possible in order to get an apples-to-apples comparison between loan offers.

You should be prepared to provide the lender with information about your current financial situation including savings, checking and investment accounts, debt obligations and two years of tax returns. This will allow the lender to determine whether you are able to afford a new mortgage.