Choosing a Lender - Do Your Homework Up Front

Real Estate Agent with Keller Williams Capital Properties DC AB15253

Taking out a mortgage to buy a house is a huge step that is scary and stressful too. The amount and terms of the loan will have a major impact on your financial picture for decades. That’s why you should choose a lender carefully.

What to Do Before You Choose a Lender

In order to qualify for an attractive interest rate, you need to prove to lenders that you are a good risk. That means you need to get your financial house in order before you start applying for a mortgage. The first step is to get copies of your credit reports and have any errors corrected. If you have a lot of credit card debt, work to pay down the balances and lower your debt-to-income ratio.

If there are issues on your credit report or inaccuracies, a good lender will be able to help you resolve them.  This is an important reason to talk to a lender early in the mortgage process.  Generally you don't need to go to a credit repair company.  Your lender can work through issues wtih you and get them resolved without charging you a ridiculous sum of money. 

Take a hard look at your budget and figure out how much you can afford in monthly mortgage payments. A lender may approve you for a bigger loan than you can realistically handle. Write down all of your monthly expenses, look at your monthly income after taxes and figure out how much you can afford for a mortgage without stretching yourself too thin.  Ramen noodles might have been "okay" in college but you really don't want a steady diet of them for the next year or two!  

Applying for a Mortgage

Be prepared!  Just like the Scouts!  Gather all of the information you’ll need for lenders to process your application. This will include pay stubs, tax returns, bank statements, a list of all financial accounts, a list of all your monthly debt payments, proof of employment and income, and information on any accounts in collection, lawsuits or bankruptcies. Nonetheless, don't be surprised if your lender may have different requirements on how far back they want the records to go.

Talk to your friends and your realtor about whom they recommend.  Give several lenders a call.  Talk with them on the phone and see if you feel comfortable with him or her.  You are going to be spending a lot of time working with this person.  You need to feel comfortable and trust the recommendations as to which loan program is best for you. 

Lenders offer a wide range of interest rates, fees, points and other terms based on each applicant’s specific circumstances. Some people get the best deal from a traditional mortgage lender, while others are offered better terms by a credit union, retail lender, correspondent lender or wholesale lender. The lender that offered your friend a great rate might not offer the same rate to you - because you are different people after all, but you could get a good deal somewhere else.

If you don’t shop around, you could spend thousands of dollars more than you have to over the life of the loan. If you don’t have the time to contact multiple lenders yourself, a mortgage broker can get quotes from several lenders in exchange for a fee. Then you can compare them to make a decision.

Getting preapproved for a mortgage can help in the home-buying process because it demonstrates that you’re in good shape financially and able to move forward quickly. Once you get preapproved, you still need to carefully manage your finances. The lender may review your income, assets and debts again before finalizing the mortgage.

Choose Carefully

Obtaining a mortgage is a significant step that will impact your finances for many years to come. You should not rush it or take it lightly. Do what you can to improve your current financial situation, be realistic about what you can afford and shop around to find the most favorable terms.



Re-Blogged 1 time:

Re-Blogged By Re-Blogged At
  1. Will Hamm 01/15/2019 05:51 AM
Home Buying
lender selection

Post a Comment
Spam prevention
Spam prevention
Show All Comments
Brian England
Arizona Focus Realty - Gilbert, AZ
MBA, GRI, REALTOR® Real Estate in East Valley AZ

Making the wrong choice can certainly cost a person a lot of money over the life of the loan, so finding a lender that can be trusted to get you the best deal, while delivering on what they say they can do is of utmost importance.

Dec 05, 2018 06:08 AM #4
Sally K. & David L. Hanson
EXP Realty 414-525-0563 - Brookfield, WI
WI Realtors - Luxury - Divorce

 A good lender makes ALLL the difference in a smoooooth transaction !

Dec 05, 2018 07:41 AM #5
George Souto
George Souto NMLS #65149 FHA, CHFA, VA Mortgages - Middletown, CT
Your Connecticut Mortgage Expert

Lise good advice.  Being proactive and working with a knowledgeable Loan Originator makes a world of difference when it comes time to apply for a mortgage.

Dec 05, 2018 07:46 AM #6
Will Hamm
Hamm Homes - Aurora, CO
"Where There's a Will, There's a Way!"

Hello Lise,  Great blog for sure and one that I would like to reblog in January if it is okay?

Dec 05, 2018 08:41 AM #7
Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi
NMLS #216987, IL Lic. 031.0006220, WI Licensed. APMC NMLS #175656 - New Lenox, IL
708.921.6331 - 40+ yrs experience

Can't tell you enough how appreciated from an LO's perspective it is to see or hear an agent providing this important and valuable info, Lise Howe.  Thank you!  So much is to be gained ... monetarily and more ... by conducting a thorough in-depth search for your LO.  And as George Souto points out, doing so proactively only increases the benefits reaped by doing so.

Thank you .. thank you .. for sharing this advice,


Dec 05, 2018 11:07 AM #8
Elisa Uribe Realtor #01427070
Golden Gate Sotheby's International - Oakland, CA
California Homes for Sale in the East Bay

Great post Lise! Thanks for sharig this!

Dec 05, 2018 01:29 PM #9
Grant Schneider
Performance Development Strategies - Armonk, NY
Your Coach Helping You Create Successful Outcomes

Good evening Lise - doing all of the homework and gathering documents is a daunting task for some.  A good LO can guide them through it all.

Dec 05, 2018 02:00 PM #10
Richie Alan Naggar
people first...then business Ran Right Realty - Riverside, CA
agent & author

Good lenders who are driven by heart and not money do their share and make life easier for the agents and their clients. These lender types are of gold...

Dec 05, 2018 02:13 PM #11
Francine Viola
Coldwell Banker Evergreen Olympic Realty, Olympia WA - Olympia, WA
REALTOR®, In Tune with your Real Estate Needs

Buyers seem reluctant to find the right lender as it can be a scary process but in the end, their diligence will pay off.  Great advice!

Dec 05, 2018 04:48 PM #12
Marte Cliff
Marte Cliff Copywriting - Priest River, ID
Your real estate writer

I'd say - absolutely get a recommendation or three. I've known lenders who were wonderful, and lenders who refused to stay in touch, didn't return calls, and on and on. They made the process miserable.

Dec 05, 2018 08:40 PM #13
Debe Maxwell, CRS | The Maxwell House Group | RE/MAX Executive | (704) 491-3310 - Charlotte, NC
Charlotte Homes for Sale - Charlotte Neighborhoods

I do exactly as you do, Lise - 3 recommendations and I strongly encourage them to use a preferred lender - they all have a perfect track record or we wouldn't be recommending them!

Wonderful post and congrats on the gold star too!

Dec 05, 2018 09:57 PM #14
Nina Hollander
Coldwell Banker Residential Brokerage - Charlotte, NC
Your Charlotte/Ballantyne/Waxhaw/Fort Mill Realtor

Hi Lise... great post. I tell my clients that they need to take the same care selecting their lender as they do their agent. At the end of the day, both can make or break a purchase.

Dec 06, 2018 04:54 AM #15
Scott Godzyk
Godzyk Real Estate Services - Manchester, NH
One of Manchester NH's Leading Agents

Such good advice Lise Howe . Something every buyer needs to do. 

Dec 06, 2018 04:55 AM #16
John Wiley
Right Move Real Estate Group- EXP Realty - Fort Myers, FL
Lee County, FL, ECO Broker, GRI, SRES,GREEN,PSA

When a client asks about lenders, I give them 3 and suggest they contact all 3 to compare.

Lenders do not all carry the same product.

They will respond in different time frames.

Some have a great reputation for closing on time with minimal struggles.

Lenders are important. Your message is great: Choose Wisely.

Dec 06, 2018 08:08 AM #17
Ron Aguilar
Continental Mortgage - Saint George, UT
Mortgage & Real Estate Advisor since 1995

As a lender since 1995 its good to read this post and pay very close attention to the replies. Thanks everyone for your input.

Dec 06, 2018 08:48 AM #18
Anne Corbin
Long and Foster - Lake Anna - Spotsylvania, VA
Serving Lake Anna & Central Virginia

Love the Girl Scout reference "Be Prepared"! Your article is a great guide to potential buyers and cautionary enough to make sure that buyers don't become house poor. Congrats on the post!

Dec 06, 2018 09:08 AM #19
Laura Cerrano
Feng Shui Manhattan Long Island - Locust Valley, NY
Certified Feng Shui Expert, Speaker & Researcher

It’s always good to follow up on things or do your homework way ahead of time with most things in life.

Dec 06, 2018 11:38 AM #20
Laura Cerrano
Feng Shui Manhattan Long Island - Locust Valley, NY
Certified Feng Shui Expert, Speaker & Researcher

There’s a reason why that mantra of being prepared lasted so long: because it works so well. Anne Corbin

Dec 06, 2018 11:39 AM #21
Jeff Dowler, CRS
Solutions Real Estate - Carlsbad, CA
The Southern California Relocation Dude

Hi Lise

This is a well deserved feature and a terrific education for would-be borrowers. Getting a mortgage can be a tough process, and there is a lot to know, and do, to be successful. Proper preparation is key.


Dec 06, 2018 01:21 PM #22
Jan Green
Value Added Service, 602-620-2699 - Scottsdale, AZ
HomeSmart Elite Group, REALTOR®, EcoBroker, GREEN

Such great information.  Having had clients experience a not so great lender on a home, I say - shop, shop, shop!  He relied on someone who didn't offer him all the options available to him and he missed the boat !  

Dec 20, 2018 08:19 AM #23
Post a Comment
Spam prevention
Show All Comments

What's the reason you're reporting this blog entry?

Are you sure you want to report this blog entry as spam?


Lise Howe

Assoc. Broker and Attorney Licensed in DC, MD, VA,
Ask me a question
Spam prevention

Additional Information