5 Smart Tips on How to Choose a Right Lender for Housing Finance

Tips on How to Choose a Right Lender for Housing Finance
  • Author: Mohsin Khan
  • Posted On: June 29, 2022
  • Updated On: July 9, 2023

When it comes to choosing how to finance your home, most people turn to loans and mortgages. Finding the right loan is about more than just getting the lowest interest or avoiding PMI or MIP mortgage insurance, though. The lender you choose will have a huge impact.

Before you make your decision and commit to one lender or another, make sure to review these tips to ensure you’re getting the most from your mortgage and have chosen the right lender.

Know What Type of Lender You Want

One Type of Lender is different from other

There are many different types of lenders you may choose to borrow from and each of them will offer different types of loans. Some lenders may offer multiple different loans whereas others may specialize in one type.

Here are some common lenders you may choose for your home finance:


Banks are the traditional mortgage lender and are great for keeping all of your money and finances in one place. Most banks have loan officers you can speak with, though you may also be able to apply online as well.

Credit Unions

Most credit unions offer loans with lower interest rates, but they don’t have as wide of a selection as banks or other lenders might. You will typically also be required to be a member of the credit union already before you can apply for the loan. With a members-only approach, though, credit unions often have better deals.

Mortgage Lenders

Mortgage lenders that aren’t associated with banks may be able to approve you for a loan faster than most banks would. All documentation and approval services are done in-house which can mean that the lenders are more willing to work with those who may have lower credit or other complications on their records.

Mortgage Brokers

A mortgage broker doesn’t offer you a loan themself, but they’ll be able to help you shop for loans and provide you with the best offers.

They’ll also act as an intermediary when it comes time to apply for the loan and sign any documents. There will be extra fees for working with a mortgage broker, but it’s a good choice for anyone who’s wary of picking out a mortgage on their own and wants professional help.

Shop Around and Consider All Your Options

Some people feel like they may only have one or two options available to them when it comes to which loan or lender to commit to. If you don’t do any research, then this may be true. However, those who are willing to put a little time in and do their research will find that there may be multiple options available.

Very rarely will the first lender you find be the perfect lender. Every lender is going to come with pros and cons, but you’ll only be able to weigh and compare them if you have several different lenders to choose from.

Talk to Your Real Estate Agent

A House with beautiful exterior

If you bought the house through a real estate agent, it’s worth it to contact them again and ask what lenders they recommend.

Although real estate agents may not always work with mortgage lenders, they will likely have a few recommendations on where to go. They’ll be familiar with the names of lenders that their clients have used in the past and will know if those lenders were easy or hard to work with when it came time to buy a property.

If your real estate agent does have good ties with a lender, the lender may be willing to reduce closing costs for you or at least make sure you’re well taken care of during the lifespan of the loan.

Look into the Lender’s Reputation

Any lender you look at should have previous and current clients that they’re working with. These clients can be a huge help in determining if a lender is trustworthy or easy to work with.

Ask potential lenders if they have any client recommendations or someone that you can talk to. Chances are high that another borrower will be able to give you a clearer idea of what it’s like to work with that lender.

Another good resource for client reviews is the lender’s website or Google My Business page.

Ask Questions

Before you meet with a lender, make a list of questions to ask them. If you can’t get any in-person recommendations or reviews, asking questions of a potential lender is especially important.

Some basic questions you’ll want to ask are:

  • How long will the process take and who will be my main contact during it?
  • Is processing, underwriting, and/or funding done in-house or do you outsource it?
  • What are the interest and annual percentage rates?
  • Are there any prepayment fees or penalties?

Write your list of questions out ahead of time so that you have it with you when you go to meet the lender. This will help you remember to cover any topics of concern during the appointment and help you stay on track.

Don’t Make a Hasty Decision

Housing finances are a big deal, so don’t feel rushed or pressured to find a lender and decide on a loan type immediately. Every lender will have different loans available and every borrower will have different requirements.

If you take the time to research and plan ahead, you may even find that you’re eligible for a better loan, such as one with a low or no down payment.

While a lender may be able to assist you with your research, they’ll be biased towards their own products and may be inclined to encourage you to choose one of their loans even if you’re eligible for something better.

When it comes to choosing a mortgage and lender, everyone will have different preferences and needs. This is why so many types of loans exist. As long as you take the time to plan ahead, think through, and research potential lenders, you’ll end up with a good deal in the end.

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Author: Mohsin Khan

Mohsin has worked as one of the experienced editors with ConstructionHow since 2020 with a total span of 5 years of experience in business PR, boasting a remarkable professional trajectory, he has collaborated with entrepreneurs and startups, and certain publications over the last few years. His unwavering interest lies in the construction industry and related materials. He believes in creating functional and aesthetically pleasing buildings, and homes that fall under the right budget. With a wide range of experience in construction, he also tapped into DIY and home improvement projects based on his extensive set of knowledge in the industry.