One of the most important decisions you’ll make when buying a home is who will lend you the money to pay for it. With dozens of options—big banks, local credit unions, online-only lenders, and mortgage brokers—it’s important to know what to look for and how to compare. Here are our best tips for choosing a mortgage lender.
Choosing A Mortgage Lender: Understand Your Financial Picture First
Having a clear sense of your financial standing is important before looking into lender comparisons. This means knowing your credit score, how much you can afford for a down payment, and what kind of monthly payment feels comfortable based on your income and expenses. Mortgage lenders will evaluate these things, so having a head start gives you better negotiating power and a more targeted idea of which lenders are a good fit for you.
Explore the Different Types of Lenders
Not all mortgage lenders operate the same way. Traditional banks and credit unions are often the first stop for many buyers, especially if they already have checking or savings accounts with them. These institutions tend to offer reliable service and the convenience of in-person support. Then there are mortgage brokers, who don’t lend themselves but instead connect you with lenders. They work on your behalf, comparing loan options from different lenders to find one that best fits your needs and budget. Finally, you have direct online lenders. These companies streamline the application process with digital tools and may offer competitive rates, but you’ll want to ensure they have solid customer service and transparent practices.
Choosing the Right Mortgage Lender Doesn’t Mean Chasing the Lowest Rate
Choosing a lender based solely on who offers the lowest interest rate is tempting, but that’s only part of the picture. Rates can be misleading if you don’t also look at fees, closing costs, and the overall structure of the loan. Some lenders offer low rates but charge high origination fees. Others may present you with a slightly higher rate but fewer out-of-pocket costs. Always ask for a Loan Estimate, a standardized document showing the interest rate, monthly payments, and total closing costs. Comparing these across lenders gives you a true apples-to-apples comparison.
Ask the Right Questions
When evaluating lenders, don’t be afraid to ask detailed questions. Ask how long they’ve been in the mortgage business and whether they specialize in any particular types of loans. Find out how long it typically takes them to close on a mortgage and whether they offer rate locks if rates rise during your approval process. Ask if they handle underwriting in-house or if it’s outsourced, which can affect the speed and smoothness of your transaction. Good lenders should welcome your questions.
Consider Customer Experience and Communication
Getting a mortgage is a major financial step, and the process can occasionally feel overwhelming. That’s why it’s important to choose a lender who communicates clearly and consistently. You want someone who keeps you updated, responds to your emails and calls promptly, and explains things in a way you can understand. Look at online reviews and talk to friends or your real estate agent about lenders they’ve worked with and trust. A smooth, well-communicated process can make all the difference in keeping your stress levels in check.
Get Pre-Approved Early
Once you’ve narrowed down your choices, it’s a smart idea to get pre-approved before you start seriously house hunting. A pre-approval isn’t a full commitment, but it shows sellers you’re serious and financially ready to move forward. It also gives you a clear price range to work within and helps streamline your mortgage process once you’re under contract.
Choosing a mortgage lender is a big decision, but there are countless resources to help. Take the time to understand your needs, compare your options, and ask thoughtful questions, and you’ll make a smart, confident decision that supports your homeownership goals.
Choosing the Right Mortgage Lender FAQs
What’s the difference between pre-qualification and pre-approval?
Pre-qualification is an initial estimate of how much you may be able to borrow, based on self-reported information. Pre-approval is more official and involves a lender verifying your income, credit, and financial details.
Should I apply with more than one lender?
Yes, shopping around with multiple lenders within a short timeframe (typically 14–45 days) won’t hurt your credit and will help you compare rates and terms more effectively.
How long does the mortgage approval process take?
On average, mortgage approval takes anywhere from 30 to 45 days, though this varies depending on the lender, your financial profile, and how quickly you provide requested documents.
Can I change lenders during the mortgage process?
Yes, but it’s usually best to switch early in the process. Changing lenders later can delay closing and may involve additional costs or paperwork.
M&T Inspection Services offers home inspections to customers in Indianapolis. Contact us to request our services.