How To Choose The Best Mortgage Lender: Finding the Right Fit for You

Updated: May 26, 2023, 10:00 am

When looking for a mortgage loan, it is essential to feel comfortable with the lender that provides the loan and not just getting the lowest interest rate.

While most lenders follow similar procedures in the mortgage process, there are some variations that could impact the fees and service you receive.
So, it’s a good idea to explore your options and compare lenders before making a decision.

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Know Where to Get Mortgages From

Conventional Banks

You can apply for a mortgage loan at your local bank branch, either in person or online. This might be a good option if you already have an account with the bank and want personalized service.

Credit Unions

There are over 5,100 federally insured credit unions in the US, and more than half of the loans they issue are mortgages. To get a mortgage loan from a credit union, you need to be a member, which usually requires you to have a “common bond” with others.

Nonbank Mortgage Lenders

These lenders, including online lenders, specialize in mortgage loans and may offer faster service and more flexibility than conventional banks.

Mortgage Brokers

If you want someone to search multiple lenders for you and find the best loan option, a mortgage broker can help. However, their services may come with additional fees.

Mortgage Marketplaces

Some companies allow you to compare interest rate quotes from multiple lenders and choose the best option for you. The lender you choose will take over the process from there.

Consider these options carefully and compare fees and rates before making a decision.

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Must-Ask Questions When Working with a Mortgage Lender

Here are some questions to consider before choosing a lender and submitting your mortgage application:
1. How long will the process take?
2. Who will be my main point of contact throughout the process, and how can we stay in touch?
3. Which parts of the process will be done online, and which will require in-person meetings (like appraisals and closings)?
4. How long should I lock in my interest rate for, and will I have to pay for an extension if the closing is delayed?

If you’re working with a mortgage broker, you may also want to ask:
1. How many lender quotes did you review, and why did you choose this lender and rate as the best option?
2. What fees and commissions will you charge, and who will be responsible for paying them (me, the lender, or both of us)?

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What to Consider When Comparing Mortgage Loan Offers

To ensure you get the best deal on your mortgage, it’s important to compare the interest rates and fees offered by at least three lenders or brokers. Here are a few tips to help you compare the offers:

Interest Rates

While the interest rate is an obvious factor to consider, it’s not the only one. Keep in mind that rates change frequently, so choose your lender carefully before locking in a rate and finalizing your application. Also, find out about points, which are fees that may allow you to obtain a lower interest rate. Determine their cost and whether or not you need them.


A mortgage loan comes with a variety of fees, and not all of them may be clear. Some lenders may itemize the fees, while others may group them together. Be sure to ask about all of the fees, including application fees, underwriting costs, and other charges assessed at closing. Compare the fees among lenders and try to negotiate as many of them as possible.

Down Payment and Mortgage Insurance

It’s best to put down as much money as possible on a mortgage loan, but you should also save for the inevitable home expenses such as repairs and furnishings. Work with your lender to see if there are any down payment assistance programs that can help you get the loan without draining your savings, particularly if you’re a first-time homebuyer. If you put down less than 20%, you’ll likely have to pay for private mortgage insurance (PMI).

After choosing the best mortgage offer, you can proceed to complete the application. Assuming that your paperwork is organized and no financial issues arise before the closing day, you have likely tackled the most challenging part of the mortgage process. You can now look forward to signing the loan documents at closing and moving into your new home.

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