How Do I Choose the Best Lender for My Mortgage?

How can you choose the right lender who will offer you the best deal on a loan as well as high-quality customer service? As you begin your research, you will find plenty of banks, brokers, online lenders, and other institutions keen to receive your loan application. Deciding who the best mortgage lender is depends on a borrower's needs and circumstances. The following are suggestions to help you choose the best lender for your situation.

Firstly, you need to know about the different types of lenders.

• Mortgage Lenders. Companies that directly set the terms of the mortgage, including the size, interest rates, terms, fees, repayment schedules, and so on.

• Mortgage Brokers. Independent, licensed agents that work to match borrowers with potential lenders and find loans to suit each borrower's needs and financial circumstances.

• Retail Lenders. Lenders that sell their own mortgage products directly to borrowers without a broker.

• Correspondent Lenders. These lenders create their own loans and offer those loans to borrowers. They then sell the mortgages to larger lending institutions on the secondary market after the loan closes.

• Wholesale Lenders. As opposed to retail lenders, wholesale lenders commonly work with mortgage brokers and other intermediaries, providing their loans to those intermediaries at discounted rates.

• Portfolio Lenders. These lenders create loans funded by the bank deposits of their clients. Portfolio lenders keep the loans after closing and do not resell the loans to other institutions on the secondary market.

• Hard-Money Lenders. Hard-money lenders are private lenders (an individual or group) who offer short-term loans secured by real estate.

Secondly, when choosing the best mortgage lender for you, the key is to focus on the various offerings of each lender and compare them. Examples are the quality of its customer service, favorable interest rates, and lower down payments and fees.

In addition, you can also compare and assess lenders based on the following issues:

• The closing time of the mortgage.

• Availability of an online or remote application and loan process.

• Willingness to negotiate.

• Accessible loan rate information on their user-friendly website.

• A quick and convenient pre-qualification process.

Tellus TIP:

While comparing different lenders, borrowers are likely to save an average of $1,500 if they obtain more than one rate quote, and an average of $3,000 by getting five quotes, according to Freddie Mac.