Step : Working with a Mortgage Lender Shopping for a Mortgage Lender

Shopping for a Mortgage Lender

Finding the right lender? can make a big difference in your ability to get the best mortgage? and loan terms that meet your needs, so shop around before deciding on one. If you don’t know where to begin this process, start by asking for referrals from family and friends, your real estate agent, or your local bank. It’s also helpful to search online for trusted lenders and read their reviews. Here are a few tips to help you to confidently choose a lender.

Finding a lender

Many types of lenders can help your homebuying experience. Choosing one type of lender over another comes down to your needs and what you’re looking for in a lender.

Finding a lender you can work with

  • Online lead service

    Online sites like LendingTree.com and Bankrate.com display information about multiple lenders and brokers in one place.

  • Mortgage broker

    Mortgage brokers work independently from the financial institutions that lend money. This approach allows them to work with multiple lenders who can help you to find a variety of rates and loan products.

  • Financial institution

    Consider speaking with a representative at your bank or credit union. Most major and local banks offer mortgage products and sometimes offer their current customers preferred rates or discounts.

  • Non-bank mortgage lender

    If your bank or credit union doesn’t offer mortgage products, or it doesn’t offer a mortgage product that fits your needs, a non-bank mortgage lender is an option since many companies specialize in only home financing.


 

Why it’s important to shop around

This could be the largest financial investment you’ll make, so be sure to shop around and speak with a few lenders to find the best fit for your situation. You can start by searching for mortgage rates online. Then, reach out to the lenders that interest you to obtain a few quotes. You’ll want to compare costs and decide which ones meet your financial needs. Remember, while the interest rate? you’ll pay is a big factor, it shouldn’t be the only factor.

Consider the following when choosing a lender:

  • Different types of loan options

  • Annual Percentage Rate (APR)

  • Closing costs and other fees

  • Quality of customer service

  • How they communicate the status of your loan application (online vs. over the phone)

  • Whether they will service your loan once it is closed, or sell it to another institution


Questions to ask a lender

When talking to different lenders, it’s a good idea to have questions prepared so you can make comparisons. Here are some questions you can ask to get a good sense about whether they’re the right lender for you.

Lender questions

  • How do you prefer to communicate with clients—email, text, phone calls, or in person?

    If it’s easier for you to write everything down and read answers to questions, consider working with a lender who prefers email. Or, if you prefer to talk through things, you may choose a lender who prefers phone calls or meeting in person. While this is different for everyone, establishing and understanding a method for communicating can make the mortgage process easier to manage.

  • How long are your turnaround times on pre-approval, appraisal, and closing?

    During the homebuying process, time is of the essence. If pre-approval takes up a lot of time, this could delay looking at homes. If the appraisal has a long turnaround time, this can delay the purchase of the home and your closing date. It’s important not to rush, but it’s also important that a lender doesn’t become a roadblock.

  • What fees will I be responsible for at closing?

    These fees are extremely important to know upfront as you’ll need to ensure that you’ve saved enough to cover the costs. It’s also an important factor when choosing a lender, as fees may vary.

  • Will you waive any of these fees or roll them into my mortgage?

    Again, this may determine what is owed upfront, your monthly payment amount, and the mortgage lender you choose.

  • What are the down payment requirements?

    You’ll want to know these requirements ahead of time so you can prepare. Also, these conditions may influence the lender you choose, especially if one lender has requirements that you can’t meet.

  • Do you offer eClosings?

    An eClosing allows you to sign some or all of the closing documents electronically, reducing the amount of paperwork that must be signed at closing. In some cases, the closing and/or notarization requirement can be fulfilled digitally, so you don’t need to travel to attend an in-person closing.

To help you in the process of finding a lender, use this guide to keep track of lenders you talk to and jot down notes.