Choosing a mortgage lender is a significant financial decision, with many options available, from online lenders and credit unions to direct lenders and mortgage brokers. While a 2024 SoFi survey revealed that interest rates are a top concern for would-be homebuyers (64%), followed by closing costs and fees, it’s crucial to look beyond just the rate.
Here are five key tips to help you find the best mortgage lender for your needs:
1. Decide What’s Important to You
Before diving into the search, take time to understand your own priorities. Consider:
- Loan Programs: What type of loan best suits your needs? Do you qualify for a VA loan as a veteran, or are you looking for a conventional loan with a specific down payment amount?
- Communication Style: How do you prefer to communicate? A good lender should be transparent and responsive. Don’t hesitate to ask questions like, “Do you communicate by phone, email, or text?” and “How quickly do you respond?” This is vital for a smooth process, as many steps require back-and-forth communication.
- Turnaround Times: Inquire about their typical turnaround times for key stages, such as preapproval, appraisal, final approval, and closing. This will help manage your expectations and timeline.
2. Be Prepared
Knowing the ins and outs of the mortgage you want to take out will empower you in your search.
- Understand All Costs: Beyond the interest rate, familiarize yourself with all potential fees. These can include origination, application, and appraisal fees, as well as various third-party costs. Be aware that fees can vary significantly between lenders. For example, a lower interest rate might come with higher upfront fees.
- Know Your Budget and Down Payment: Have a clear idea of how much home you can afford and the down payment required for your desired loan program. Keep in mind that down payment requirements for the same loan program can differ among lenders.
- Credit Health: Your credit score plays a pivotal role in determining which mortgage lenders and loan programs you’ll qualify for. Ensure your credit profile is in good standing before you begin your search. The better your credit, the more favorable terms you’re likely to receive.
3. Know Your Lender Options
The mortgage lending world offers diverse types of lenders, each with distinct features:
- Mortgage Bankers: Work for financial institutions that underwrite loans but don’t take deposits. They can also sometimes broker loans.
- Retail Lenders (Direct Lenders): These lenders originate mortgage products offered solely by their financial institution and deal directly with borrowers.
- Mortgage Brokers: Act as intermediaries between borrowers and wholesale lenders. They don’t typically work for a single institution but connect you with various lending options, earning a commission (usually a percentage of the loan amount). The wholesale lender ultimately approves and funds the loan.
- Online Lenders: A modern option, online lenders (like SoFi) focus on competitive rates and streamlined, digital application processes due to lower overhead.
- Correspondent Lenders: Often local mortgage companies, they fund loans with their own capital but then typically sell these loans to larger financial institutions.
- Wholesale Lenders: Unlike retail lenders, they don’t interact directly with borrowers and rely on brokers to distribute their products.
- Portfolio Lenders: These lenders originate and fund loans using their own deposits and generally do not resell them. This category often includes community banks, credit unions, and savings and loan institutions.
To assess a lender’s reputation, check online reviews, such as those on the Better Business Bureau’s website. You should also verify that the lender is registered with the Nationwide Multistate Licensing System Registry in your state.
4. Compare Lenders
Shopping around is essential for finding the best deal.
- Gather Multiple Quotes: Reach out to various lenders—including banks, online lenders, credit unions, and local independent lenders. Request written quotes that detail loan terms, interest rates, APR, fees, and closing timelines.
- Use a Mortgage Calculator: Plug in different offers to estimate total interest costs and compare various down payment scenarios.
- Focus on Apples-to-Apples Comparisons: While third-party fees should generally be consistent across lenders, concentrate on comparing the lender’s specific loan terms, qualified rate, and fees.
- Assess Communication: Getting multiple quotes also allows you to experience different communication styles and gain insight into each lender’s process.
As of Monday, July 21, 2025, the national average 30-year fixed mortgage APR is approximately 6.87%, while the average 15-year fixed mortgage APR is around 5.91%. For a 5-year Adjustable-Rate Mortgage (ARM), the average APR is about 7.43%. These rates can fluctuate, so always get current quotes.
5. Get Preapproved
Once you’ve narrowed down your choices, apply for mortgage preapproval with your top lender.
- Provide Documentation: You’ll need to submit financial documents, including pay stubs, W2s, tax returns, bank account balances, and credit information.
- Strengthen Your Offer: A preapproval letter demonstrates to sellers that you are a serious and vetted buyer, streamlining the home-buying process.
- Review the Loan Estimate: After applying, the lender will provide a Loan Estimate detailing the down payment, fees, estimated monthly payments, and other terms. This is your chance to ask any remaining questions about lending fees, rates, commissions, mortgage points, and other fine print.
- Negotiate: Don’t be afraid to use competing offers as leverage to negotiate better pricing. Even a small reduction can result in significant savings over the life of the loan.
Finding the right mortgage lender is a critical part of your home-buying journey. By carefully comparing lenders based on factors beyond just the interest rate—like fees, communication, and responsiveness—you can find a trustworthy partner who helps you secure the best mortgage for your unique needs.
Are there any specific types of mortgage loans or lenders you’d like to explore in more detail?