Choosing the right mortgage lender is about more than just getting the lowest interest rate. It’s about trust, transparency, and finding a true partner for one of your biggest financial decisions.
A few years ago, I worked with a couple who were finally ready to buy their first home after years of renting. They were sharp, organized, and they did their research, or so they thought.
Like many first-time buyers, they clicked on an ad from a large online lender that advertised a mortgage rate significantly lower than most of the ones they had seen. Within minutes, they were prequalified.
When it came time to lock in their rate, things became a bit… unusual. Their original loan officer disappeared, seemingly replaced by someone new nearly every time they called.
They also noticed additional fees labeled “discount points” on their loan estimate.
And worst of all, unexpected delays caused them to miss their original closing date, forcing them to renegotiate with the seller.
They found my information online and decided to switch lenders. The irony? Their new rate wasn’t all that different. But the peace of mind? Night and day.
Stories like this are far too familiar. Choosing the right mortgage lender is one of the most critical decisions a first-time homebuyer can make.
And it’s about more than just the rate. It’s about trust, service, and making sure your financial future is in good hands.
Understanding the Different Types of Mortgage Lenders
Not all lenders are created equal, and understanding the differences can help you choose one that aligns with your needs and values.
| Lender Type | Pros | Cons |
|---|---|---|
| Retail Banks | Trusted brands, easy if you already bank with them | Often slower, less flexibility, may have limited loan options |
| Credit Unions | Low fees, member-focused service | Membership required, may lack national reach |
| Mortgage Brokers | Can shop multiple lenders for the best rate | Less control over underwriting, can feel like a middleman |
| Direct Lenders | Faster process, in-house underwriting, personalized service, strong agent relationships | Less product variety |
From my own time working as a mortgage broker, later on with a bank, and then as a direct lender, I saw the trade-offs play out daily.
Brokers often shine when buyers have unique needs, such as credit challenges, self-employment, or complex income challenges.
Banks and credit unions, especially if you already have a relationship with them, tend to offer competitive rates and discounted fees.
Direct lenders typically control the entire process, meaning they are part of the application process, underwriting, and funding. They also tend to be more flexible than banks and credit unions, and their availability isn’t limited to “banker’s hours”.
Don’t Shop on Rate Alone
Not long ago, I had a client, let’s call her Anna. She was fully pre-approved and looking at houses when she was solicited by a national lender advertising a 6.25% interest rate.
6.25% was .375% lower than what I had quoted. She messaged me to let me know she was switching lenders.
Three weeks later, she called me. “Craig, I made a mistake.” The 6.25% rate came with two discount points (resulting in an additional $7,600 in upfront fees) and a 45-day lock (she needed a 60-day lock).
Anna ended up coming back. Yes, my rate was slightly higher, but with no points, and personalized updates every few days. She closed on time and even got a thank-you gift from me and my team.
That experience is why I always tell buyers: focus on APR, not just rate. The APR is a calculation that factors in closing costs, including fees to buy down the rate.
Here are the factors I advise my clients to consider when shopping lenders and interest rates:
Origination and lender fees
APR (Annual Percentage Rate)
Loan discount points
Third-party closing costs and fees
Rate lock terms and flexibility
Lender reputation & responsiveness
What looks cheaper on paper can end up costing more, especially if delays cost you your dream home.
Ask the Right Questions
When you’re interviewing lenders, treat it like a job interview, because they’re working for you.
Asking the right questions can help you spot the difference between a polished salesperson and a true advisor. For first-time buyers, here are a few questions to start with:
What loan programs do you recommend for a first-time buyer in my situation?
Are there down payment assistance programs I might qualify for?
What’s your average time from application to closing?
How often and in what way will we communicate throughout the loan process?
Do you offer a rate lock, and what’s included in your lock policy?
You want clear, confident answers, not just industry jargon talk. And if a lender seems annoyed by your questions? Keep looking.
Look Beyond Big Names
National online lenders spend millions on ads and have brand recognition. But bigger isn’t always better.
One of my past clients was drawn to a popular digital lender that promised 10-minute approvals.
But what didn't they tell him? That his file would bounce between departments, he’d be routed through a call center, and his assigned processor would change twice during underwriting.
In contrast, when he later worked with a smaller regional lender (aka me!), the experience was different. He had one point of contact, consistent updates, and a loan officer who answered his questions, even on weekends.
Especially for first-timers, don’t underestimate the value of working with someone local who can walk you through the process face-to-face (or at least video chat-to-video chat).
Read Reviews—But Read Between the Lines
Online reviews can be helpful, but they only tell part of the story.
Here’s how to read them smartly:
Look for patterns, not isolated complaints
Focus on feedback about communication, delays, and transparency
See how the company responds to negative reviews
Ask your real estate agent or trusted contacts for referrals—they’ve seen which lenders get deals done (and which ones drop the ball)
Most happy buyers don’t leave reviews. Most unhappy ones do. So don’t just look at the stars, read the context.
Use the Pre-Approval Process to Test-Drive the Lender
Pre-qualification is like getting a rough draft. Pre-approval is the real deal.
And here’s the thing: getting pre-approved is also a great way to “test drive” a lender. You’ll see how they communicate, how fast they move, and whether they seem genuinely interested in helping you succeed.
If the pre-approval process feels scattered, slow, or impersonal, that’s likely how the rest of the transaction will go too.
Trust Your Gut
Buying your first home is stressful. You deserve a lender who makes the process feel manageable, not more overwhelming.
If someone seems dismissive, pushy, or can’t explain basic terms in plain English, walk away. Trust your instincts. You’re looking for a partner, not a pressure cooker.
Final Thoughts
Choosing a mortgage lender isn’t just about chasing the lowest number. It’s about aligning with someone who understands the process, values your time, and has your best interests in mind.
Whether you’re buying a starter condo, a single-family home, or a multi-unit with your best friend, the right lender will feel like a teammate, available, responsive, and invested in your success.
So take your time. Ask the hard questions. And choose a lender who earns your trust.
