When buying a home, in addition to selecting a realtor, one of the most important decisions you'll have to make is choosing a mortgage lender. Your lender, alongside your buyer’s agent, will be your partner throughout the home buying process, and will determine how much you can borrow, what interest rate you'll pay, and what fees and closing costs you'll incur.

Choosing the right lender can save you time, money, (and headaches!), and help you achieve your homeownership dreams. Not all lenders are created equal. But how do you know which lender is best for you?

Here are some questions you should ask when comparing different mortgage lenders:

What types of loans do you offer?

There are many types of mortgage loans available, such as conventional, FHA, VA, USDA, jumbo, fixed-rate, adjustable-rate, and more. Each loan has its own requirements, benefits, and drawbacks, and not all lenders offer every type of loan. Ask the lender what types of loans they specialize in, and what types of loans they recommend for your situation. Some lenders have programs that allow them to handle unconventional situations due to what they do with the loan after it closes (sell to Fannie Mae or Freddie Mac or hold onto the loan as a portfolio loan, which allows the lender some flexibility in looking at unique scenarios because they don’t have to Compare the pros and cons of each loan option, and how they fit your budget, goals, and qualifications.

What are your rates and fees?

The interest rate and fees that a lender charges can have a significant impact on your monthly payment and the total cost of your loan. Ask the lender for a loan estimate, which is a document that breaks down the interest rate, APR, points, origination fee, appraisal fee, credit report fee, title insurance fee, escrow fee, and other closing costs. You should also ask the lender if they charge any prepayment penalties, late fees, or other hidden fees. Compare the loan estimates from different lenders and look for the best combination of rate and fees.

How long will it take to process and close my loan?

The time it takes to get approved and close on your loan can vary depending on the lender, the type of loan, the market conditions, and your personal situation. Some lenders can process and close your loan faster than others, which can give you an edge in a competitive market. Ask the lender for their average turnaround time, and what factors could delay or expedite your loan. Also ask the lender about their communication style, and how often they will update you on the status of your loan and whether or not they will advocate for you with the listing agent to help potentially win a deal in a competitive market.

How do you handle the underwriting and closing process?

Ask each lender how they handle the underwriting and closing process. Underwriting is the process of verifying your income, assets, credit, and property value, and determining if you qualify for the loan. Closing is the final step of the transaction, where you sign the loan documents and receive the keys to your new home. Ask how long their underwriting and closing process typically takes, and what documents and information they will need from you. You should also ask the lender if they use an in-house or a third-party underwriter, and if they have a dedicated team to handle your loan from start to finish. Look for a lender that has a fast and efficient underwriting and closing process, and that communicates with you clearly and regularly throughout the process.

What are your qualifications and reviews?

Choosing a reputable and experienced lender is crucial for a smooth and successful home buying experience. Who does your realtor recommend? Shameless Plug & spoiler alert – Ben Burkett with NFM Lending. Ask the lender about their credentials, such as their license, accreditation, affiliation, and awards. Ask the lender for references and testimonials from past clients and check their online reviews and ratings on sites like Zillow, Google, Yelp, and Better Business Bureau. Choose a lender with a proven track record of delivering quality service, satisfaction, and results.

Do you have any special programs or incentives?

Some lenders may offer special programs or incentives for certain types of borrowers, such as first-time home buyers, veterans, low-income earners, or those with excellent credit. These programs or incentives can help you save money, qualify for a better loan, or get additional benefits. Ask the lender if they have any programs or incentives that apply to you, and what the eligibility criteria and terms are. Compare the programs and incentives from different lenders, and see which one offers the most value and advantage.

We always recommend using a local lender and are happy to point our buyer’s in the right direction with recommendations. Ultimately, the decision is up to the buyer as to what lender they want to use, but there can be drawbacks to using an online lender.

Some of the potential pitfalls associated with using an online lender when buying a house are:

You may not get personalized service or guidance.

Online lenders often rely on automated systems and algorithms to process loan applications and communicate with customers. This means that you may not have a dedicated loan officer or advisor who can answer your questions, explain your options, or help you resolve any issues that may arise during the underwriting and closing process. You may also have difficulty reaching a live person or getting timely responses from the online lender, especially if they are located in a different time zone or have a high volume of customers.

You may encounter technical glitches or delays.

Online lenders use digital platforms and tools to collect, verify, and store your information and documents. While this can make the process more convenient and efficient, it can also expose you to technical problems, such as system errors, crashes, or security breaches. If your online lender's website or app goes down, you may not be able to access your account, upload your documents, or check your loan status. If your online lender's system fails to process your information or documents correctly, you may experience delays or errors in your loan approval or closing. These glitches or delays can jeopardize your rate lock, your contract, or your closing date, and cost you time and money.

You may face challenges with appraisal, inspection, or title services.

Online lenders may not have local knowledge or connections with the real estate market or professionals in your area. This can affect their ability to provide you with accurate and reliable appraisal, inspection, or title services, which are essential for completing your loan and closing your transaction. You may end up with an appraiser, inspector, or title agent who is unfamiliar with your property, neighborhood, or local regulations, and who may charge you higher fees, perform substandard work, or miss important details. You may also have difficulty coordinating or communicating with these third-party service providers, especially if they are contracted by the online lender and not by you or your agent.

Your lender is important. We love and recommend Ben Burkett with NFM Lending as he has proven over and over again that his service, communication, loan programs, and knowledge is top notch. Your buying experience will be impacted by the lender, the closing company, the inspector, etc. and that is why we will never put our name behind someone that we don’t believe treats their clients with the same level of care as do. With Ben you are a relationship, not just a number, and he will tailor his experience with you to your own personal needs and circumstances. That being said, there are situations that you may encounter that you may need an unconventional lender and we have those lenders at our fingertips as well.