Choosing the right mortgage lender could save you thousands of dollars. Shopping for one should be one the first steps you take when buying a house. Comparing lenders and lining up preapprovals early gives you some benchmarks to work from, and when your real estate agent recommends lenders, you'll have a better sense of whether they're offering a good deal.
Plus, having preapprovals in hand lets buyers and agents know you're serious. Real estate agents typically have a roster of recommended lenders, often built on years of repeat business. "Choosing a lender is not just about obtaining financing," says Matthew Martinez, a California real estate broker.
"It is about choosing one of the most important members of the transaction team." Agents vet lenders to add to their networks, and they know what separates a good one from a bad one. Here are the four questions they say you should ask any lender you're considering. A lender may offer a special program based on your profession, income or location that can make the mortgage more affordable.
Physician mortgage loans are one such example. Certain lenders offer mortgages for medical professionals that come with no down payment, higher loan limits and less stringent debt-to-income requirements. Some lenders offer preferential mortgage terms to executives or professionals who relocate for work.
First-time or low-income homebuyers may qualify for closing cost or down payment assistance. Ask your lender about these programs, because not every real estate agent is clued in. "My hot take is real estate agents are abysmal at being able to direct clients to the right place to get the best loan for them," says Michael Perna, a Michigan Realtor.
Some cost-saving programs are hard to find, but even for a relatively common product — like an FHA loan — it helps to work with a lender who has real expertise. According to Ken Sisson, a real estate broker and former loan officer in California, each lender has an "appetite" for writing different kinds of loans and working with different kinds of borrowers. If you have an unusual financial situation, finding the right lender could mean the difference between being denied or approved.
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