How to Choose a Mortgage Lender

Choosing a mortgage lender can be a daunting task for first-time homebuyers, but it doesn't have to be. Learn how to choose a mortgage lender that's deserving of your business.

What makes a good mortgage lender?
When all mortgage lenders claim to be reputable and worthy of your business, it can be difficult to sort out who is telling the truth and who isn't-though it is vitally important that you do just that. No one wants to be taken advantage of-especially when dealing with a transaction as important as the purchase of your home.

Separating the scam artists from the legitimate lenders can be difficult, but it isn't impossible. Here are some of the things that you should look for:

Referrals: You probably know lots of people that own homes, so use that to your advantage. Talk to family and friends and ask whom they used as a mortgage lender. Find out if they were happy with the purchase experience and if they are still happy with their choice.

Need more referrals? Talk to your real estate agent. She has likely handled hundreds, if not thousands of home purchases, and should have a good feel for the lenders in your area.

Still not satisfied? Make a list of possible lenders, and then go online to search for customer complaints or praise.

Longevity: Look for a company that has been around for a long time, and you're likely to find a company that you can trust. Find out how long the lenders on your list have been in business. Uncover some that are fairly new? Leave them to someone else. You need someone that you can count on to be around, now and in the future.

It's also a good idea to find out how long your lending agent or broker has been on the job. This will help you to determine how knowledgeable he is, not only about lending practices, but also the practices of his particular lending company.

Go big: Turn to "Mortgage Lender" in the phone book, and you're likely to turn up hundreds of entries. To bring the list down to a more manageable size, rule out the small lenders and focus in on the big names in the industry. Banking institutions and nationally recognized financial institutions are big for a reason-they've proven themselves as trusted leaders in the industry. If you already have a banking relationship with one or more banks, you are well on your way to finding a trustworthy source for your mortgage loan.

Competitiveness: After you have fine-tuned your list of lending prospects, it's time to approach the finalists to see what they have to offer. Fill out a loan application with each one, and wait to see what they can do for you. Then compare the offers to find out who is most competitive. Not satisfied with the initial results? Contact each lender to see what they can do to sweeten the pot.

Someone you feel comfortable with: Even if a lender meets all of the previous criteria, they may not be the right lender for you. Before agreeing to work with a particular mortgage lender, you should always be sure that you feel comfortable working with them. If you don't, move on. Buying a house is a big investment, and you should feel comfortable with the process.

Choosing the right mortgage lender takes time and thought. Consider what you hope to get out of the home buying experience, and then choose a lender that can accommodate those needs.