Buying a home is an exciting process. But for some reason, unlike selecting a real estate broker, mortgage lenders are a bit of an afterthought. Most people go with the first person their realtor or a friend recommends. But this is a mistake as a mortgage is a product just like a home or car and different lenders have different offerings with terms and prices that are often variable and negotiable.

Before you even start looking at homes, you’ll want to choose a mortgage lender that best suits your unique financial situation. Shop around for rates and evaluate all your options, so you’re not leaving any money on the table. With a little bit of diligent leg work, you’ll be on your way to owning the home of your dreams with a dream team at your side.

Know Your Credit Score Ahead of Time

A good rule of thumb is to investigate your credit score 6 to 12 months before talking to any lenders, so you know how much bargaining power you have. You can request one free report a year from either your credit card company, Experian, Equifax, or TransUnion, and the better your credit score, the better your loan terms. Fix any late payment issues, delinquent accounts, or high balances in advance to avoid disappointment or surprises.

Know the Types of Lenders

Before you begin shopping for a lender, you’ll want to familiarize yourself with the different types of lenders. You can either go directly through a mortgage bank, credit union, correspondent lender, or mutual savings bank – or use a mortgage broker to shop around for you. While shopping for a direct lender, you’re responsible for asking about rates, terms, down payments, fees, and more.

Sometimes you’ll get options for the same loan but with vastly different terms. This is where things can get confusing. Mortgage brokers take the stress away by doing the cost comparisons for you, but they do a 1 – 2% fee for their service. Only you can do the math to determine if that’s worth it to you.

Understand Your Mortgage Options

Once you’ve decided on a lender, it’s time to dive deep into the weeds. Brush up on the different types of mortgages so you can speak your lender’s language. We’ve outlined the different loan options for you to make a decision based on what makes sense for your situation.

See If You Qualify Any Special Lending Programs

As you’re shopping for a mortgage lender, don’t forget to inquire about any special programs. First-time home buyers, USDA loans (department of agriculture), VA loans (veteran’s affairs), and FHA loans (federal housing administration) are just a few that may be available to you. These programs are designed to help make home buying easier in certain circumstances.

Shop Around

After you’ve done your background research, it’s time to collect a few quotes and compare and contrast costs. This is when the real work begins. You’ll want to look at all of the following:

• Annual percentage rates (APRs)
• Application fees
• Appraisal fees
• Title fees
• Origination fees

When you consider all these factors, the lowest interest rate may not always end up being the cheapest or the best option. Always take your time, ask questions, and do a deep analysis before making a decision.

Get Pre-Approved

After you’ve selected the loan you want to go with, get the lender to write you a preapproval letter for the amount you’re willing to offer before you start your home search. Preapproval guarantees that a lender is willing to loan you a certain amount of money, which puts a seller’s mind at ease and shows you’re a serious buyer.