How to Choose a Mortgage Lender
One of the biggest challenges of buying a home is choosing the right lender. As with any big purchase, you should shop around for the best deal.
Know Where to Look
When you're shopping for a mortgage lender you need to know where to look:
- Traditional banks — Conventional banks offer a wide range of financial services, including mortgage loans.
- Credit unions — Like conventional banks, credit unions also offer a range of financial services including home loans.
- Online mortgage companies — Nonbank lenders often offer their services completely online and usually specialize in mortgages.
- Mortgage brokers — A mortgage broker will help you sort through the choices and find the one that's best for you.
Be Prepared
When shopping around for a mortgage, you need to be prepared so you'll get the best deal possible. Check your credit report and take steps to improve your credit score. Save for a down payment and be able to prove that you have a stable income.
Ask the Right Questions
- How long does the application process take?
- Who will I communicate with?
- What steps happen online and which ones will need to happen in person?
- Can I get a rate lock, and what timeframe do you recommend for that?
Compare Offers
Once you've gathered information from different lenders you'll want to evaluate your options. First, take a look at the interest rates you've been offered. Then compare fees including underwriting fees, application fees, and closing costs.