5 Tips for Finding the Best Mortgage Lenders

Mortgage Process, Mortgages
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When you buy a home, you’re in it for the long haul. You’ll have a mortgage payment for 15, 20 or 30 years, after all, so it’s smart to shop around to find the best mortgage lenders out there. Keep reading for tips on how to shop around.

Here are our picks for mortgage lenders, listed by category:

Best mortgage lenders for first-time home buyers

Best mortgage lenders for refinancing

Best online mortgage lenders

Best mortgage lenders for face-to-face service

Best mortgage lenders for borrowers with bad credit

How to look for a lender

Finding a mortgage lender involves more than just getting a good interest rate; you want to work with the best mortgage companies, staffed by professionals who will guide you through the process.

Below are five tips to help you hunt for the best mortgage lender. For details, click here.

  1. Get your credit score in shape. The higher your credit score, the more bargaining power you’ll have.
  2. Know the mortgage lending landscape. We’ve done some of the homework for you below.
  3. Get preapproved for your mortgage. Boost your chances of having your offer accepted by getting preapproved.
  4. Compare rates from several mortgage lenders. You can search for the best mortgage rates online.
  5. Ask the right questions and read the fine print. Find out about requirements and fees, including costs beyond principal and interest payments.

NerdWallet has researched some of the best available major national mortgage lenders to help you quickly find the right lender for your needs.

Best mortgage lenders for first-time home buyers

Lenders who cater to first-time home buyers usually offer FHA loans or other programs with low down payment requirements, as well as loans to borrowers with lower credit scores.

Quicken Loans 4.5-stars
  • Quicken Loans is the largest FHA lender in the nation.
  • Quicken also has a 1% down payment program for qualified buyers.
  • Its Rocket Mortgage app allows you to complete the application process online.
  • Quicken Loans review
citimortgage 4.0-stars
  • Offers full line of purchase mortgages, including FHA and VA loans.
  • Has low down payment options that don’t require private mortgage insurance.
  • Available in all 50 states.
  • CitiMortgage review

 

» MORE: Best mortgage lenders for first-time home buyers

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Best mortgage lenders for refinancing

You’ve been through the mortgage process once, but are set to do it again. These lenders offer excellent home loan refinancing.

lenda-logo-270 4.0-stars
  • Experienced mortgage refinance lender, with no origination fees or broker commissions.
  • Minimum 640 credit score qualification.
  • A suggestion engine will look at the info you provide and determine if there are things you can do to lower your rate.
  • Lenda review
Chase-logo 3.5-stars
  • Chase consistently offers some of the lowest refinance rates among major national lenders, according to the NerdWallet Mortgage Rate Index.
  • Offers the HARP federal refinance program to eligible homeowners.
  • Chase also writes FHA and VA refinance home loans.
  • Chase mortgage review

 

 » MORE: Best mortgage lenders for refinancing

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Best online mortgage lenders

If you prefer doing business online rather than face-to-face, these mortgage lenders provide an online application process.

Rocket Mortgage 4.5-stars
  • The company provides loan applications online and through a mobile app.
  • Many financial details can be imported, reducing the hassle of compiling them yourself.
  • Gives a loan decision in minutes.
  • Rocket Mortgage review
guaranteed-rate-logo-55x270 4.5-stars
  • Offers online application process with secure document uploads and digital signature acceptance.
  • Provides credit scores from all three bureaus for free.
  • Has 170 branches across the nation for questions better handled in person.
  • Guaranteed Rate review

 

 » MORE: Best online mortgage lenders

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Best mortgage lenders for face-to-face service

If you want to talk to a mortgage loan officer, you’ll find these lenders have offices across the nation and likely in your neighborhood.

BOA-logo 4.0-stars
  • Provides an online tool that keeps you up to date on the status of your mortgage application.
  • Mortgage specialists to assist in the loan process.
  • Offers an online home value estimator.
  • Bank of America mortgage review
citimortgage 4.0-stars
  • Offers full line of purchase mortgages, including FHA and VA loans.
  • Has low down payment options that don’t require private mortgage insurance.
  • Available in all 50 states.
  • CitiMortgage review

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Best mortgage lenders for borrowers with bad credit

A low credit score can sink a borrower’s chance to buy a home. These lenders have programs that can help.

naf logo-270x55 (1) 4.5-stars
  • Uses manual underwriting to evaluate borrowers, which allows more flexibility to approve loans
  • Offers a broad range of loans, including FHA, fixed-rate and adjustable-rate mortgages; minimum score 580
  • Offers multiple down payment assistance and grant programs
  • New American Funding review
carrington 4.0-stars
  • Specializes in loans to borrowers with lower credit scores, minimum score 550 in some cases.
  • Offers down payment assistance programs through housing authorities in some states.
  • Requires online education course for borrowers.
  • Carrington Mortgage review

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5 tips for finding the best mortgage lenders

To get a jump-start on the mortgage loan process, use these five tips to find the best lender for you.

1. Get your credit score in shape

Not everyone can qualify to buy a home; you have to meet certain credit and income criteria to assure mortgage companies you can repay your loan.

A low credit score signals that lending to you is risky, which means a higher interest rate on your home loan. The higher your credit score and the more on-time payments you make, the more power you’ll have to negotiate for better rates with potential lenders. Generally, if you have a score under 580, you’ll have a tough time qualifying for most types of mortgages.

To build your credit score, first make sure your credit reports are accurate and free of errors. Get your report from the three major credit bureaus: Equifax, Experian and TransUnion. Each is required to provide you with a free copy of your report once every 12 months.

Next, try to pay off high-interest debts and lower your overall level of debt as quickly as possible. By lowering your debt, you’ll improve your debt-to-income ratio. Paying off credit cards and recurring loans before you buy a home will also free up more money for the down payment.


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2. Know the lending landscape

It’s difficult to discern who the best mortgage lenders are in a crowded field. Here are the most common types of lenders you’ll choose from:

  • Credit unions: These member-owned financial institutions often offer favorable interest rates to shareholders. And many have eased membership restrictions, so it’s likely you can find one to join.
  • Mortgage bankers: Bankers who work for a specific financial institution and package loans for consideration by the bank’s underwriters.
  • Correspondent lenders: Correspondent lenders are often local mortgage loan companies that have the resources to make your loan, but rely instead on a pipeline of other lenders, such as Wells Fargo and Chase, to whom they immediately sell your loan.
  • Savings and loans: Once the bedrock of home lending, S&Ls are now a bit hard to find. But these smaller financial institutions are often very community-oriented and worth seeking out.
  • Mutual savings banks: Another type of thrift institution, like savings and loans, mutual savings banks are locally focused and often competitive.

You can, and should, check if each lender you consider is registered in the state you’re shopping in through the Nationwide Multistate Licensing System Registry. Also, search the Better Business Bureau for unbiased reviews and information.

3. GET PREAPPROVED

Taking the time to get a mortgage preapproval letter before you start looking at houses is important. It can put you head and shoulders above other buyers who may be interested in the same house you want to bid on. It does that by showing the seller that a lender has evaluated your finances and figured out how much you can afford to borrow, and therefore how much house you can afford.

The truth is, if you’re not preapproved, you’ll probably be the only one at the open house who isn’t and will therefore face a big disadvantage when making your offer.

To get preapproved, you’ll have to provide lenders with a fair amount of financial information. It’s worth the effort, because it shows sellers your offer on their home is likely to close. It can also make getting a mortgage a little easier, if you get your home loan from the same lender, because the lender will already have financial information about you that’s essential to getting a mortgage.

Here’s a list of what you’re likely to have to provide to get preapproved.

  • Social Security numbers for yourself and any co-borrowers
  • Bank, savings, checking, investment account information
  • Outstanding debt obligations, including credit card, car loan, student loan and other balances
  • Two years of tax returns, W-2s and 1099s
  • Salary and employer information
  • Information about how much of a down payment you can make, and where the money is coming from

It’s a good idea to contact more than one lender during the preapproval process. One might offer convenient online preapproval, while your local credit union could help you overcome any preapproval barriers you face. Getting preapproved will help you find a mortgage lender who can work with you to find a home loan with an interest rate and other terms suited to your needs.

4. Compare rates from several mortgage lenders

This is where homework and a lot of patience come into play. As noted, there are all kinds of mortgage lenders — neighborhood banks, big commercial banks, credit unions and online mortgage lenders. You have more options than ever.

You can search for the best mortgage rates online to start. Keep in mind that the rate quote you see online is a starting point; a lender or broker will have to pull your credit information and process a loan application to provide an accurate rate, which you can then lock in if you’re satisfied with the product.

Once you have several quotes in hand, compare costs and decide which one makes the most financial sense for you. Use your research as leverage to negotiate for the best mortgage rates possible.

While there’s more to finding a good lender than picking the lowest rate, that doesn’t mean it isn’t important. The total interest you pay over the life of the loan is a big figure, and a low rate can save you thousands of dollars.

» MORE: Use our mortgage calculator to find out your monthly mortgage payment.

5. Ask the right questions and read the fine print

Picking the right lender or broker to work with can be tricky. Narrow your choices by asking for referrals from friends, family or your real estate agent, or by reading online reviews. Once you have some names, it’s time to ask:

  • How do you prefer to communicate with clients — email, text, phone calls or in person? How quickly do you respond to messages?
  • How long are your turnaround times on preapproval, appraisal and closing?
  • What lender fees will I be responsible for at closing? (Fees may include commission, loan origination, points, appraisal, credit report and application fees.)
  • Will you waive any of these fees or roll them into my mortgage?
  • What are the down payment requirements?

Note: If you’re looking for low-down-payment options, a loan backed by the Federal Housing Administration, Department of Veterans Affairs or Department of Agriculture may be your best bet. However, keep in mind that more and more lenders are offering low-down-payment options on mortgages that aren’t backed by a government program.

Also, check with your mortgage lender or broker if buying points to lower your rate makes sense. If you buy points, you’re paying some interest upfront in exchange for a lower rate on your mortgage.

This might be a good move if you plan on living in the home for a long time.

Remember, principal and interest payments on a mortgage aren’t the only costs of homeownership; you should ask your lender about others, including closing costs, points, loan origination fees and other transaction fees. If you’re unsure of something, make sure you ask for an explanation.

Most mortgage lenders will require an “earnest money” deposit to start the loan process. Ask the lender to specify under what circumstances the earnest money will be kept, and if the answer is vague, keep shopping around.

Don’t forget to examine the fine print on your loan documents. These will tell you the exact finance terms, who pays which closing costs, what items are and aren’t included with the home, whether there’s a home inspection contingency, the closing date and other important details.

  • Quicken Loans: Best mortgage lenders for first-time homebuyers
  • Wells Fargo Mortgage: Best mortgage lenders for first-time homebuyers and face-to-face service
  • Lenda: Best mortgage lenders for refinancing
  • Chase mortgage: Best mortgage lenders for refinancing
  • Rocket Mortgage: Best online mortgage lenders
  • Guaranteed Rate: Best online mortgage lenders
  • Bank of America: Best mortgage lenders for face-to-face service
  • New American Funding: Best mortgage lenders for borrowers with bad credit
  • Carrington: Best mortgage lenders for borrowers with bad credit
  • More from NerdWallet
    Compare online mortgage refinance lenders
    Compare mortgage rates
    Get Preapproved for Your Mortgage


    NerdWallet’s selection of mortgage lenders for inclusion here was made based on our evaluation of the products and services that lenders offer to consumers who are actively shopping for the best mortgage. The six key areas we evaluated include the loan types and loan products offered, online capabilities, online mortgage rate information, customer service and the number of complaints filed with the Consumer Financial Protection Bureau as a percentage of loans issued. We also awarded lenders up to one bonus star for a unique program or borrower focus that set them apart from other lenders. To ensure consistency, our ratings are reviewed by multiple people on the NerdWallet Mortgages team.

    Steve Nicastro is a staff writer at NerdWallet, a personal finance website. Email: Steven.N@nerdwallet.com. Twitter: @StevenNicastro.

    Updated June 30, 2017.