Buying a home is an incredible accomplishment but it does not come without its challenges. Not only are you on the hunt for your dream house (you know, that one with that perfect yard for the dog and amazing fireplace), you’re likely also taking stock of your finances to figure out what you can afford.
And then there’s getting a mortgage loan, which means finding a good, reputable mortgage lender — one that offers the type of loan program that best suits your needs, and also provides excellent customer service and competitive rates. Finding a mortgage lender is one of the biggest financial decisions you’ll make.
Luckily, there are plenty of viable options for borrowers. There are online lenders, credit unions, direct lenders, and mortgage brokers with a vast array of loan programs to choose from, to name just a few. The trick is narrowing down a crowded field to find a mortgage lender you trust that offers the loan program you want.
If you’re wondering how to find a good mortgage lender, here are five tips on how to find the best mortgage lender for you.
Tips for Shopping For a Mortgage Lender
1. Decide What’s Important
Throughout the process of obtaining a loan, you’ll have a lot of conversations with a bunch of different people. Before jumping in headfirst, take some time to understand what loan programs you may qualify for, the amount of downpayment you have to work with, and if you are a veteran, what lenders offer VA loans.
Once you narrow down the type of mortgage loan program you will be shopping for you can think about what other elements are important to you.
For one thing, there’s the type of communication you’ll want to have with the mortgage lender. Good mortgage lenders should be clear and upfront about the loan process and all associated costs. They should be willing to answer all your questions — and whether you’re a first-time homebuyer or not, you should feel comfortable asking any questions you may have.
You may even want to ask about how a mortgage lender will be communicating with you so you’ll know what to expect. For instance, you could ask them: “Do you communicate by phone, email, or text?” and “How quickly do you respond to questions?”
This is important because there are multiple steps that require back-and-forth correspondence and paperwork when applying for a mortgage. Maybe it’s critical for you to have someone who responds quickly. Ask your potential mortgage lender: “What are your turnaround times on things like pre-approval, appraisal, final approval and closing?”
💡 Quick Tip: Buying a home shouldn’t be aggravating. SoFi’s online mortgage application is quick and simple, with dedicated Mortgage Loan Officers to guide you through the process.
2. Be Prepared
Part of knowing how to find the best mortgage lender is to learn the vital details about the mortgage you want to take out. It’s hard to choose between lenders if you don’t truly know what you’re looking for, especially when there’s as much fine print as is typically involved in taking out a mortgage loan.
First, know the costs involved in taking out the type of mortgage you need in addition to the interest rate. There will likely be various fees associated with taking out a mortgage, such as origination and application fees, appraisal fees, and other third-party fees.
Fees can vary by lender, so have some idea of what is common and what to look out for. For example, if the rate quote is lower, are the fees higher as a result?
Next, it’s smart to have an idea of how much home you can afford and how much of a down payment is required under your preferred type of loan program. Be aware that the same loan program can have different down payment requirements at different lenders.
Knowing this type of information may help you narrow your search to the lenders who best fit your needs. Also, having your financial details in order will tell you how much you have to work with so you can get down to business with the lender of your choice.
How you have managed your credit and the resulting credit scores will come into play throughout the mortgage process. Your credit score may be one of the determining factors on what mortgage lenders you can choose from based on the loan programs you may be eligible to qualify for.
You may want to take some time to make sure your credit profile is in good enough shape for the loan program you want to qualify for before starting the process of searching for a mortgage lender.
3. Know Your Options
Finding the right mortgage lender means being able to navigate who you can work with in the big world of mortgage lending. Here are some of the major types of mortgage lenders out there. Many may offer similar types of loan programs, but possibly with different fees and qualifying criteria.
Mortgage bankers: Bankers work for a financial institution that underwrites loans, but does not take deposits. Mortgage bankers can sometimes also broker out loans.
Retail lenders: Similar to mortgage bankers and also known as direct lenders, retail lenders only originate mortgage products offered by their financial institution.
Mortgage brokers: Mortgage brokers don’t generally work with one institution, but instead act as an intermediary between the borrower and a wholesale lender. For the service of pairing you with a mortgage loan from one of the lending institutions they are approved to work with, the mortgage broker will generally take a commission that is a percentage of the loan amount. The loan is approved and funded by the wholesale lender.
Online lenders: A newer option for borrowers, online lenders like SoFi offer mortgage loans and focus on competitive rates and a more streamlined application.
Correspondent lenders: Typically, correspondent lenders are local mortgage loan companies that have the capital to fund a loan, but then turn around and sell the loan to a major financial institution.
Wholesale lenders: Unlike retail lenders, wholesale lenders don’t interact with borrowers and typically rely on brokers to sell their products.
Portfolio lenders: These lenders originate and fund loans from bank deposits and do not typically resell them after closing. They typically include community banks, credit unions, and savings and loan institutions.
Still, wondering how to find a reputable mortgage lender from these options? One thing you can do is read online reviews, like those on the Better Business Bureau’s website. You can also check to make sure that your lender is registered to originate loans with the Nationwide Multistate Licensing System Registry in your state.
4. Compare Lenders
It’s a good idea to shop around for mortgage rate quotes with a number of different lenders. Check with banks, online lenders, credit unions, and other local independent lenders to compare loan terms, interest rates, fees, and closing timelines. Request quotes in writing.
You can plug offers into a mortgage calculator to get an idea of the total interest costs. With a mortgage calculator, you can also compare different down payment options.
And remember, the interest rate isn’t the only cost to take into consideration. You’ll want to account for all of the fees associated with each rate and program offer.
Third-party fees should generally be the same no matter what lender you choose, so it’s the lenders’ loan terms, (qualifying) rate, and fees to compare apples to apples.
Checking on costs isn’t the only reason to get multiple quotes. It also allows you to experience a number of communication styles, and you’ll have a look into the process for each lender.
💡 Quick Tip: Generally, the lower your debt-to-income ratio, the better loan terms you’ll be offered. One way to improve your ratio is to increase your income (hello, side hustle!). Another way is to consolidate your debt and lower your monthly debt payments.
5. Get Pre-approved
Once you’ve narrowed it down to your chosen lender, apply for mortgage preapproval. During pre-approval, you’ll be asked to provide documentation on your financials, such as your paystubs, W2s, tax returns, bank account balances, and credit information.
This step is valuable when placing an offer on a home. A pre-approval letter shows that you have been vetted for the first (credit) portion of the loan process.
Once you apply with a lender you will receive a Loan Estimate laying out the down payment, fees, estimated monthly payment, and more.
This is the time to ask any lingering questions on the terms of the loan such as lending fees, rates, commissions, mortgage points, and any other fine print you may not understand.
Don’t be shy! This is a huge, important decision and you should feel welcome to ask every question twice if you need to.
At this stage, you may even want to consider negotiating your offers. If at all possible, use the competing offers as leverage to obtain better pricing. If the very thought of asking is intimidating to you, just remember that it never hurts to ask and the worst they can say is no. You might be surprised at what you can get by speaking up.
Finding the right mortgage lender is one of the most important decisions you’ll make in the home-buying process. You’ll want to compare different lenders and choose one you feel comfortable working with and who will answer your questions and get back to you quickly.
The right mortgage lender can help you get the best mortgage, and the best rate, for your needs. Be sure to weigh the options and compare and contrast different loan estimates to find the right deal for you.
Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% - 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It's online, with access to one-on-one help.
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Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
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*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.