We are here to help our borrowers impacted by COVID-19.   Learn more.

Skip to main content
Wondering What to Look For in a Mortgage Lender? We’ve Got the Answers.

Wondering What to Look For in a Mortgage Lender? We’ve Got the Answers.

Worried about what it takes to buy a home? Overwhelmed by the number of lenders out there? Good news: If you’ve ever purchased a car, you’ve probably got a good idea of what’s coming. Although the two experiences differ in some ways, they’re more similar than you might think.

When you decide to buy a new car, you’re likely researching a lot of things. First and most obvious, the car you want. Second, the dealership you’re buying from. In this step, you’re probably looking at several different dealerships, and for good reason: No two dealerships are alike, and they all seem to offer varying benefits.

For example: One offers free oil changes for life, another offers free inspections for two years, and the third offers a limited powertrain warranty. The dealership you decide to buy from should offer a distinct intersection between availability, price, and benefits.

Don’t worry, we’re not here to guide you through the car buying process—but when you’re looking for a mortgage professional, you should shop around as much as you do when looking for a new car to try and find a similar intersection.

What To Look For in a Mortgage Lender

Not only are there different types of lenders, there are a host of different mortgage products available, and not every lender has the same access to the same loans. And, because many lenders operate on different platforms, the technology they use might influence your buying timeline, the lender’s decision, and even your rate.

In this great big financial ocean, it’s easy to get lost at sea, floating from option to option. We’re here to help you find your direction—your Cardinal direction, if you know what we mean. Read on to find out what to look for in a mortgage lender.

What’s Your Type?

One of the first things to look at is the type of mortgage professional you’re working with. And trust us, there are plenty of options out there. Here’s a brief look at a few of the most common options—mortgage brokers and direct lenders.

Pro-Tip: Direct lenders and mortgage brokers are not the same thing. Lenders are businesses that offer home loans. Brokers are businesses that serve as aggregators, providing various quotes from multiple lenders. At the end of the day, it’s a matter of personal preference.

Direct Lenders
Unlike brokers, direct lenders use their money to originate loans. That often means you’ll benefit from better rates and lower upfront costs, as well as a one-to-one relationship with the lender across every touchpoint of the process. However, it’s important to consider that working with a direct lender means you’re limited to their own products. Because loan applications appear as hard pulls on your credit report, shopping around with multiple direct lenders—or going to a second after the first wasn’t able to approve you for one of their loan options—could affect your credit score and subsequent approval odds.

Mortgage Brokers
Matchmaker, matchmaker…find me a loan? While mortgage brokers do not originate loans themselves, or put up any of their own money in the process, they act as an intermediary of sorts—connecting borrowers with potential lenders to provide a handful of options from other lenders. Because of this, brokers are often paid via broker fees (paid by you, the buyer) and through partnerships with certain lenders who might “pay to play” for higher visibility over other lenders.

Online Lending
Thanks to advances in lending technology, many lenders are turning to wholly digital solutions that allow the process to be completed mostly—or entirely—online. Depending on who you work with, you may miss out on the traditional person-to-person interaction, but you’ll benefit from streamlined communication and faster origination. Most online lenders fall into the direct lender category, and brokers may provide quotes from those same lenders. Cardinal Financial offers a hybrid model, providing online capabilities while matching you with a loan professional for a personalized lending experience.

Strengthen Your Search With These Five Tips

Whether you decide to stick with that traditional bank mortgage or a modern online mortgage, knowing the type of lender will only get you so far. When it comes to making a decision, there are a handful of other things you should consider as well. Shopping around for a mortgage professional? Keep these five tips on hand:

  1. Technology
    What kind of technology, if any, do they use? These days, many loans can be completed 100% online. Of course, if you choose to roll with an online lender, your experience will only be as good as their tech. That’s why we love Octane, our proprietary home loan platform built with borrowers in mind and offering a more efficient process for faster closings.
  2. Service
    You will, inevitably, speak to someone when applying for a loan. You don’t want an interaction with a call center talking head who’s reading from a script. You should look for a lender who’s empathetic to your circumstances and willing to explain any and everything along the way. This is your home loan, after all—you’re paying for it and you deserve top-shelf service.
  3. Credit
    Low scores don’t have to keep you from buying a home, but different loan options require different credit scores. Before you apply for a loan, know your credit score. Trust us, the lender will ask about it. The more you know, the more they can help. You might even qualify for a program or grant that could put a home loan within reach. This tip also goes back to service: You want empathy, not a lender who’s going to turn you away or make you feel bad about your circumstances.
  4. Finances
    Two things (almost) every home loan will require: A down payment and closing costs. These aren’t small chunks of change, and often seem daunting to borrowers. Before you apply for a loan, it’s important to know how much you’ll be able to put down for your home purchase. To that end, it’s critical to know what kind of closing costs you’re looking at.
  5. Rates
    This is one of the most important reasons to shop around and obtain pre-qualifications (not pre-approvals, those are different) from various lenders. Depending on your home’s location, your debt-to-income ratio (i.e. your monthly debt payments divided by your gross monthly income) and a handful of other factors, different lenders may offer different rates and terms for your home loan. While a 1% difference between rates may not seem like a lot right now, it could equate to thousands of dollars saved—or wasted—over the life of your loan.

Finding a Home Loan Expert You Love

You may have a mortgage professional in mind, or you might be starting your search from scratch. But now that you know what to look for in a mortgage lender, you should feel more prepared to begin your journey.

Still looking for the right lender? Not to toot our own horn, but we’re pretty confident in our ability to check all the right boxes. Connect with the experts at Cardinal Financial to get your pressing questions answered and find out what kind of loan options you might qualify for.

In this great big financial ocean, it’s easy to get lost at sea, floating from option to option. We’re here to help you find your direction—your Cardinal direction, if you know what we mean.

author photo

About the Author

Dale grew up in a little mountain town in New Mexico before moving to the east coast to pursue his dream of becoming a culinary superstar. When that didn't work out, he turned to writing—something he's been doing for about a decade now. From relationship columns to ads for luxury appliances and plumbing, it's safe to say he's covered the gamut. These days, he's writing to help bring the American Dream—and the experience of homeownership—to people across the country.