Select the right mortgage company for your needs

Choosing a mortgage company comes down to four factors: interest rate, closing costs, loan options and customer service. The difference between lenders can cost you $10,000-30,000 over the life of your loan. Get quotes from at least three lenders, compare the Loan Estimates side-by-side and check reviews for service quality before deciding.

Why Choosing the Right Mortgage Lender Matters

A 0.25% rate difference on a $350,000 loan costs you $52 more per month. Over 30 years, that’s $18,720. Add in varying closing costs and you could save or lose tens of thousands by picking the wrong lender.

Beyond money, your lender affects your experience. A disorganized lender can delay your closing, stress you out and even cost you the house if they can’t perform.

Types of Mortgage Companies and Lenders

Traditional Banks

Traditional banks like Chase, Bank of America and Wells Fargo offer mortgages alongside other banking services.

Pros:

• Relationship discounts for existing customers
• Physical branches for in-person help
• Full range of loan products
• May offer portfolio loans for unique situations

Cons:

• Often not the lowest rates
• Can be slower and more bureaucratic
• Less flexibility on guidelines
• May sell your loan immediately

Best for: Borrowers who value in-person service and want all banking in one place.

Credit Unions

Member-owned institutions often have competitive rates and lower fees.

Pros:

• Lower rates and fees typically
• More personalized service
• May be flexible on guidelines
• Keep loans in-house more often

Cons:

• Must qualify for membership
• Fewer loan products sometimes
• Less technology/convenience
• Smaller capacity for complex loans

Best for: Members who prioritize low costs and personal service.

Mortgage Brokers

Brokers shop multiple lenders on your behalf.

Pros:

• Access to many lenders
• Can find best rate quickly
• Good for complex situations
• One application, multiple options

Cons:

• Broker fee adds to cost sometimes
• Quality varies widely
• May push higher-commission products
• Less control over process

Best for: Borrowers with unique situations or those who want to comparison shop without multiple applications.

Online Lenders

Companies like Rocket Mortgage, Better and LoanDepot operate primarily online.

Pros:

• Often lowest rates
• Fast, convenient process
• Good technology and apps
• Available evenings and weekends

Cons:

• Less personal service
• Can feel impersonal
• May struggle with complex situations
• Phone support varies in quality

Best for: Tech-savvy borrowers with straightforward applications who prioritize rate and convenience.

Direct Lenders

Non-bank lenders like United Wholesale Mortgage or PennyMac focus solely on mortgages.

Pros:

• Mortgage specialists
• Often competitive rates
• More flexibility than banks
• simplified processes

Cons:

• No other banking services
• May sell servicing quickly
• Brand recognition varies
• Quality varies by company

Best for: Borrowers who want mortgage expertise without needing other banking relationships.

What to Compare When Choosing a Mortgage Company

Compare Mortgage Interest Rates

The rate determines your monthly payment and total interest paid.

How to compare:

• Get quotes on the same day (rates change daily)
• Compare same loan type (30-year fixed to 30-year fixed)
• Ask for rate with same points/credits
• Get rate in writing

What to watch:

• Rates with points (you pay upfront for lower rate)
• Rates with credits (higher rate, lower closing costs)
• Teaser rates that aren’t available to most borrowers

Closing Costs

Fees beyond your down payment that you pay at closing.

Typical closing costs:

• Origination fee: 0-1% of loan
• Appraisal: $400-700
• Title insurance: $1,000-2,000
• Attorney/escrow: $500-1,500
• Recording fees: $100-250
• Total: 2-5% of loan amount

How to compare:

• Request loan estimate from each lender
• Compare Section A (origination charges)
• Look at total closing costs on page 2
• Ask what’s negotiable

Loan Options

Different lenders offer different products.

Consider if they offer:

• Conventional loans
• FHA loans
• VA loans (if eligible)
• Jumbo loans (if needed)
• Adjustable-rate options
• Down payment assistance programs

Customer Service

Service quality affects your entire experience.

How to evaluate:

• Read online reviews (Google, Zillow, Bankrate)
• Ask for references
• Note responsiveness during quote process
• Check complaint history with CFPB and BBB

Processing Time

How long from application to closing?

Questions to ask:

• Average time to close?
• Do you offer digital/e-closing?
• What might delay my loan?
• Can you meet my deadline?

How to Get Quotes From Multiple Mortgage Lenders

Step 1: Gather Your Financial Information

Before contacting lenders, have ready:

• Income and employment info
• Asset statements
• Rough credit score
• Down payment amount
• Property price range

Step 2: Contact Multiple Lenders

Get quotes from at least 3-5 lenders:

• One bank
• One credit union (if you qualify)
• One online lender
• One broker or local lender

Step 3: Request Loan Estimates

After applying, each lender must provide a Loan Estimate within 3 business days. This standardized form makes comparison easy.

Key sections to compare:

• Loan Terms (page 1)
• Projected Payments (page 1)
• Closing Costs (page 2)
• Cash to Close (page 2)

Step 4: Ask Questions

Clarify anything unclear:

• Is this rate locked? For how long?
• What fees are negotiable?
• What could change before closing?
• What’s your average closing time?

Red Flags When Selecting a Mortgage Lender

High-Pressure Sales Tactics

Be wary if a lender:

• Pushes you to decide immediately
• Won’t provide written quotes
• Discourages you from shopping around
• Promises things that seem too good

Hidden Fees

Watch for:

• Fees that appear late in the process
• Vague line items
• Charges significantly higher than other lenders
• “Junk fees” with unclear purposes

Poor Communication

Warning signs:

• Slow to return calls/emails
• Can’t explain terms clearly
• Provides inconsistent information
• Seems disorganized

No Loan Estimate

If a lender won’t provide a Loan Estimate after you’ve applied, that’s a major red flag. It’s required by law.

Questions to Ask Before Choosing a Mortgage Company

1. What’s my interest rate and APR?
2. What are my total closing costs?
3. Is there an origination fee?
4. Can you lock my rate? For how long?
5. What loan types do you offer?
6. How long does your average loan take to close?
7. Will you service my loan or sell it?
8. What documents do you need from me?
9. What could delay my closing?
10. Do you offer any discounts?

Making Your Final Decision

Weight What Matters Most

If rate is priority: Go with lowest APR, assuming service is acceptable.

If service matters more: Choose the responsive lender with good reviews, even if rate is slightly higher.

If timeline is tight: Pick the lender with fastest documented closing times.

If situation is complex: Choose the lender who understands your situation and has solutions.

Trust Your Gut

After comparing numbers, consider:

• Who explained things most clearly?
• Who was most responsive?
• Who made you feel confident?
• Who seemed most competent?

Frequently Asked Questions

Should I use my bank for a mortgage?

Not automatically. Your bank may offer relationship discounts, but they’re often not the most competitive. Get quotes from your bank plus 2-3 other lenders to compare.

Does it matter if my mortgage is sold?

Selling the loan is common and shouldn’t affect your terms. However, servicing transfers can be annoying. Ask if the lender keeps servicing in-house.

How many lenders should I compare?

At least three, ideally five. More quotes give you better use and ensure you’re getting a competitive deal.

Will shopping hurt my credit?

Multiple mortgage inquiries within 14-45 days count as one inquiry for credit scoring. Shop within a focused window and the impact is minimal.

Should I use a mortgage broker?

Brokers work well for complex situations or if you want one-stop shopping. For straightforward loans, you may get better rates going direct.

Next Steps

1. Make a shortlist - Pick 3-5 lenders from different categories
2. Get pre-approved - Submit applications to each
3. Compare Loan Estimates - Review side-by-side within a few days
4. Ask questions - Clarify anything that’s unclear
5. Choose based on total picture - Rate, costs, service and fit

For more guidance, see our posts on what you need to buy a house and understanding mortgage rates.