Buying a home is an incredible accomplishment but does not come without its challenges. Not only are you on the hunt for your dream home (you know, that one with that perfect yard for the dog and amazing fireplace), you’re likely running through 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; that offers the type of loan program (down payment requirement, DTI, etc) that best suits your needs, but also offers excellent customer service and competitive rates.
An organization that you can trust and that understands that this 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 someone you trust that offers the loan program you want.
We might not be able to help you find the house of your dreams, but 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 such as 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 deeper about what other elements are important to you.
Right off the bat, it can be hard to pinpoint what type of communication you’ll want during the loan process out of a mortgage lender. But you’ll likely know it when you experience it, for better or worse.
Good mortgage lenders should be clear and upfront about the loan process and all associated costs. They should be willing to answer questions because you will have questions—and you should definitely feel comfortable asking them.
You may even want to ask about a mortgage lender’s communication channel before engaging in a relationship. Here are a few questions you could consider asking them: “Do you communicate through phone, email, or text?” and “How quickly do you respond to questions?”
As you can imagine, there are multiple steps that require back-and-forth correspondence and paperwork when applying for a mortgage. Maybe it’s important 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?”
2. Be Prepared
Part of knowing how to find the best mortgage lender is to go in ready to hold your own in conversations. It’s hard to choose between two options 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. Such as 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. It’s good to note here that even the same loan program can have different down payment requirements at different lenders.
For instance, with a Fannie Mae first time home buyer loan you can put as little as 3% down, but not all lenders carry this program at only 3% down, some lenders may require 5% or 10% according to their internal guidelines.
Armed with this type of information may help you narrow your search to the lenders who best fit your needs. Also, having your financials in order will allow you to know how much you have to work with so you can get down to business with the lender of your choice.
Throughout the mortgage process, how you have managed your credit and the resulting credit scores will come into play. 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.
To maximize your buying experience, 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 within 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 through varied channels and 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: 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 quickly turn around and sell the loan to a major financial institution.
Wholesale lenders: Unlike retail lenders, wholesale lenders don’t interact with borrowers and 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 bigger banks, community banks, credit unions, and savings and loan institutions.
Still, wondering how to find a reputable mortgage lender amongst 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 Nationwide Multistate Licensing System Registry in your state.
4. Compare Lenders
It’s a good idea to shop around for mortgage rate quotes through 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 on 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 play around with different down payment options.
And remember, the interest rate isn’t the only cost to take into consideration; don’t forget to account for all of the fees associated with each rate and program offer.
Third-party fees should pretty much 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. This way, you will get to experience a number of communication styles, and you’ll have a look into the process for each lender.
5. Get Pre-approved
Once you’ve narrowed it down to your chosen lender, apply for mortgage pre-approval. During pre-approval, you’ll be asked to provide documentation on your financials, such as your paystub, W2s, tax returns, bank account balances, and credit information.
This step in the process 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 and you just need to find an eligible property.
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, 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 point, 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 if you just ask.
As you compare your mortgage options, consider SoFi Mortgages. With SoFi, you could secure a mortgage with as little as 10% down.
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
Checking Your Rates: To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.
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.
External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
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