wikiHow to Choose a Mortgage Lender

Three Parts:Preparing for Your Mortgage SearchFinding Lenders and Getting QuotesChoosing a Lender

After weeks, or months, of searching, you've found the property you've been looking for. Now what? It's time to start the mortgage application process. Luckily, it's not as difficult as you might think. The first step is to choose the right mortgage lender.

Part 1
Preparing for Your Mortgage Search

  1. Image titled Get Power of Attorney Step 8
    Put together your financial portfolio. The more information you are able to provide about your financial status, the easier it will be to maneuver through the mortgage application process. Collect a list of information about your debts and assets and print out a summary that you can show to lenders.
    • Get an updated credit report. Take care of details that are not correct and pay outstanding debts as much as you can. This will increase your credit score and allow you to get better interest rates.[1]
    • Make a list of your debts. Include balances owed and account numbers. You'll need this information when you fill out a loan application.
    • Put together a list of all your assets. This should include both checking and savings accounts, investment accounts, retirement accounts and any personal property you own (like cars or boats).
  2. Image titled Do Research Step 11
    Refresh your memory of loan terminology. There are some basic loan terms that are simple to understand but may be confusing at first to borrowers who are unfamiliar with them. Learn a few of the basic terms so that you understand what your lender is talking about and know what to look for. Your lender should also be able to explain these terms and any other, more complex terms that may show up. For now, start with the following terms:
    • Annual percentage rate (APR). This is the annual interest rate charged on the loan.
    • Lender fees. These are additional fees (on top of interest) that are paid to the lender at closing.
    • Loan program. This is the general type of mortgage that describes the interest rates and length of the loan's life. Some common loan programs include 15-year fixed mortgage rate or 30-year adjustment rate mortgage (ARM).
    • "Good Faith" estimate. This is the initial, pre-approval set of loan terms given to you by a lender. It includes the interest rate and any additional fees that will be charged.[2]
  3. Image titled Conduct Research Step 4
    Decide what you're looking for in a mortgage. It will be difficult to find the right lender if you don't know what kind of mortgage you are looking for. For example, think about how quickly you want to pay off your mortgage. The lives of these loans can vary widely in length, so make sure you know what your plan is. Just make sure to consider that paying off the loan in a shorter time will result in higher monthly payments (but less overall interest paid).[3]
  4. Image titled Have a Good Job Interview Step 3
    Make a list of questions to ask. Think about specifically what you want to know when applying for a mortgage loan. For example, consider asking what monthly payments would be under a variety of different loan terms. Or, you could ask why certain fees are charged. You can ask any number of things of your lender without even applying for loan, so ask as many questions as you need to. If your lender doesn't take the time to respond to them or is difficult to reach, you may want to seek other lenders.[4]
    • Keep the questions consistent between lenders so you have a standard of comparison.
    • Ask about special mortgage loans if you think you qualify for them.[5] Special loan programs include VA loans (for veterans of the armed forces), USDA loans (for rural areas), and programs offered by state or local governments. These programs may offer borrowers lower rate or better repayment terms.[6]

Part 2
Finding Lenders and Getting Quotes

  1. Image titled Have a Good Job Interview Step 9
    Ask around for recommendations to reputable lenders. The first lender you find may not have the best loan package. You should take advantage of any connections you have that can refer you to a reputable mortgage lender.
    • Call your current mortgage lender or bank, if you've had a good experience with them in the past. Being a return customer may give you some leverage with negotiations.
    • Search the Internet financial sections for mortgage interest rates.
    • Talk to friends for recommendations.
    • Take recommendations from real estate professionals for mortgage lenders they've had a good working relationship with.[7]
  2. Image titled Choose the Right Divorce Lawyer Step 13
    Ask each prospective mortgage lender what their interest rates are for the type of mortgage you are considering. Don't be afraid to ask questions if you don't understand the type of loans they're proposing.
    • For example, you should always ask for the specific interest rate charged on each loan duration. This is also known as the annual percentage rate (APR).
    • Additionally, you should ask whether the stated interest rate on each loan is fixed (non-changing) or adjustable (changing).[8]
  3. Image titled Do Your Own Taxes Step 23
    Gather the interest rates applicable to various loan terms at each mortgage lender. Get interest rates for various different types of loans and loan durations from each lender so that you can compare these different loan types between them. This also will be helpful if you change your mind about the loan duration you want.
    • For example, imagine you are considering either a 15 year or a 30 year loan. You ask for rate estimates from two lenders. The first offers you a 15 year loan at 3.1 percent and a 30 year estimate of 3.8 percent. The second offers rates of 3.2 and 3.7 percent, respectively. You would then see that the first lender offered a better rate for the 15 year loan but was not as good of a choice for the 30 year loan.[9]
  4. Image titled Find a Job in Dubai Step 5
    Request a written explanation of the estimated charges, costs and/or fees that the lender would require of you at closing time. This statement is a "Good Faith Estimate." Most reputable mortgage lenders will offer to provide this for you.
    • Make sure the Good Faith Estimate includes costs for all points, processing, legal fees, filing and closing fees.
    • You can also have the lender email or fax this estimate to you as a backup.[10]

Part 3
Choosing a Lender

  1. Image titled Find a Job in Dubai Step 6
    Confirm that the lenders in question are licensed. Access the National Mortgage Licensing System & Registry (NMLS) to determine whether or not each of your mortgage lenders are licensed in your state. Immediately eliminate from the list those lenders that do not show up on this website. The NMLS can be accessed at[11]
  2. Image titled Prepare for a Job Interview Step 4
    Think about how helpful each lender seemed. How a lender acted when you met with them can say a lot about how doing business with them will be later. Look for lenders who were helpful, professional, and willing to answer any questions you had. Did the lender stick to the interest rate they quoted over the phone or online? Do they set forth a timeline for progressing with your loan application (when to lock in rates, etc.)? Eliminate any lenders that seemed shady in any way.[12]
    • Also, pass on the mortgage lenders that did not provide clear written information.
  3. Image titled Say Goodbye to Coworkers Step 12
    Look for lender reviews. Search for each lender online to locate reviews of that lender. There should be sources like and Google local reviews that show up when you search for the lender. Look for higher scores and watch out for any problems other borrowers have run into with that lender.[13]
  4. Image titled Negotiate an Offer Step 6
    Try negotiating the fees on the Good Faith Estimate. Lenders may be able to waive or lower some of the fees, even those that they originally try to argue are "necessary." For example, you should try to negotiate down the application fee to free or near free, if possible. Additionally, the appraisal fee is a necessary fee, but only if it is within reasonable bounds; you should negotiate down an appraisal fee that is over $400. If you are using a broker to get your loan, you may also be able to negotiate down origination fees and underwriting fees.
    • Some fees are always non-negotiable. These include recording fees, title insurance, tax-related fees, document stamp fees, and title fees.[14]
    • You may also be able to negotiate discount points down. However, these are essentially a form of prepaid interest on the house, so you gain nothing in the long run by avoiding this expense now.
    • For example, you might be able to pay $2,000 to reduce your interest rate by 0.25 percent. This would save you money by reducing your monthly payment by a small amount each month, and would add up over the life of your loan.[15]
  5. Image titled Apply for Child Support Step 21
    Compare all written documentation from each mortgage lender. The lowest rate is not necessarily the best option if there are thousands of dollars more in fees and expenses than a slightly higher interest rate loan.
    • For example, you will be charged an origination fee on your loan. This is a percentage of the total value of the loan and is usually around one percent. If you were offered two loans with the same interest rate of 4.5 percent, but the first charges a 1.5 percent origination fee compared to the second's one percent origination fee, you would be better off choosing the second loan.[16]
  6. Image titled Write a Grant Proposal Step 10
    Narrow your possible choices of mortgage lenders. Compare your lenders' offered interest rates and fees structures for the type of loan you are seeking. Obviously, you should go with the reputable lender that offers you the cheapest combination of interest rates and fees.
    • Understand each loan type the mortgage lender is offering. There's a great deal of difference in a 30-year fixed-rate and a 30-year adjustable-rate mortgage (ARM), mainly that the interest rate in the ARM stands to change unexpectedly. Know the difference and feel confident in the explanation provided by the mortgage lender.[17]
  7. Image titled Write a Grant Proposal Step 21
    Contact the mortgage lender you've selected. Ask them to lock in the interest rate and fees you've negotiated and draw up a contract. Make sure to ask if your good faith estimate rates and fee structure still stand.[18]
  8. Image titled Write a Grant Proposal Step 18
    Read the fine print of the mortgage contract before signing. Make sure you look at the fine print to ensure that you are getting the loan terms and fees that you have negotiated. Pay special attention to what happens if the loan doesn't go through. It is a serious red flag if the "good faith" or "earnest money" deposit you give the lender in advance is kept by the lender in the event that the loan doesn't go through.
    • Again, ask for an explanation if there are any unexpected fees or confusingly worded statements in the contract.[19]


  • Do not pay for any application or processing fees prior to the selection of your mortgage lender. Make sure you lock in the interest rate first, as well.

Sources and Citations

Show more... (16)

Article Info

Categories: Mortgages and Loans