What to do now
Make a list of potential lenders
Recommendations on lenders might come from friends, relatives, or real estate agents. While this gives you a start, you should also seek out different lenders on your own. There are many ways to find potential lenders. You can contact your local bank or credit union and other lenders that serve your area, as well as checking online. A housing counselor can also be a good resource to help you figure out how to identify lenders.
You can work with either a lender or a mortgage broker to get a mortgage
You can meet with lenders and mortgage brokers at this stage to get a feel for both options. Review the differences between a lender and a mortgage broker. For simplicity, we use the term “lender” or “loan officer” to refer to both lenders and mortgage brokers.
Contact at least three lenders on your list
Don’t stop with just one lender! By exploring your options with multiple lenders, you get more information about your options and get a sense for which loan officers you might feel most comfortable working with. Call each lender to set up an appointment to meet with a loan officer.
At the appointment:
- Share the basic facts about your situation and the kind(s) of loan you are considering.
- Ask the loan officer whether your plan makes sense to them, or whether they might recommend something a little different. If they recommend something different, ask why.
- Ask the loan officer to show you the interest rate, APR, estimated fees, and monthly payments for a couple different loan options.
- Ask the loan officer to look at your documents and help you understand whether there are reasons you might not qualify for the loan options you have discussed.
Keep your options open
Don't decide on a lender at this stage. Although you are not getting a loan now, explore your options with different lenders before you find a house because once a seller accepts your purchase offer on a home, you may have as little as a couple days to line up financing.
What to know
You’ll get the most value out of these conversations if you bring documentation with you
Lenders have very specific guidelines about how they count and document your income, assets, and the source of your down payment funds. An experienced loan officer can help you spot potential issues and suggest ways to address them. If your application might be complicated – for example, if you are self-employed – it’s best to find out sooner rather than later. Seek out lenders who are willing to go over the details with you.
You can decide whether to allow a lender to check your credit
A loan officer may ask for permission to check your credit. Knowing your credit score allows the loan officer to give you accurate pricing information about different loan options. An experienced loan officer can also help you check your credit report for errors. However, a lender’s credit check can show up in a future credit report and can result in a slight dip in your credit score. Within a 45-day window, you can have multiple lenders check your credit without additional impact on your score. Find more about what to consider when deciding when to allow a lender to check your credit.
After the lender checks your credit, you might start getting other offers of loans or credit, called “trigger leads” or “unsolicited offers of credit.” The offers are generally allowed under the Fair Credit Reporting Act. Credit reporting companies include your name on lists that creditors and insurers use to send you offers for credit or insurance, even if you did not sign up for these offers. You have the right to opt out of receiving the offers. Talk to your loan officer about how they plan to check your credit and whether you should expect trigger leads. The credit reporting companies operate a web site where you can opt out or find out more .
Even if a real estate agent or homebuilder has a preferred lender, still look for a better deal
Homebuilders and real estate agents are often familiar with certain mortgage lenders, but you can and should shop around to make sure you’re getting the best deal.
How to avoid pitfalls
Work only with loan officers who make you feel comfortable asking questions
A loan officer’s answers to your questions – as with all mortgage and real estate professionals – should make sense and help you understand your choices.
- If a loan officer makes you uncomfortable, can’t answer your questions, or is too pushy, look for another lender that is a better fit.
- As you move through this process, always make sure to check that the documents you receive match what the loan officer tells you. If they don’t, ask questions. If the loan officer is unable to answer your questions, consider working with a different lender.
- You can check to see if a loan officer is authorized in your state. Most are listed in this loan originator database .
Credit discrimination is illegal
Under the Equal Credit Opportunity Act, it’s illegal for lenders to base credit decisions on certain factors such as race, religion, marital status, national origin, receipt of any sort of public assistance, sex, or age (as long as you are old enough to enter into a contract). Learn more about illegal credit discrimination.
