Lender selection

Before you embark on your mortgage application, you should spend some time locating the lender who will help you find the best mortgage rate. Depending on your situation and your preferences, there are different ways to shop.

Certainly, there is a huge variety of mortgage products on the market. Figuring out which one is best is a task in itself. Fortunately, that task can be simplified considerably by choosing a lender wisely. At the most basic level, your decision will come down to the choice between mortgage lenders and mortgage brokers.

Mortgage lenders handle mortgages directly. Think of banks, which typically process loans in-house from beginning to end. Most mortgage lenders have a relatively small number of products available. In that way, they can be restricting. At the same time, a bank that you have been with for a long time might provide you with an incentive for choosing their mortgage. On a less formal level, your bank will have a more vested interest in helping you find the best mortgage rate.

Mortgage brokers can be a little more impersonal. Their main attraction is the ability to provide you with information about a large number of lenders. In this way, a broker provides access to more products. In many cases, and especially if you have bad credit, a broker might be best equipped to locate the best mortgage rate.

Your decision ultimately comes down to personal preference. If time is not an issue, you might want to collect information from a representative at your bank first, and proceed to a broker to learn what other rates might be available.