Four Steps to Find the Right Mortgage Lender

A home is probably the most expensive purchase you'll ever make. Choosing the right lender can reduce the stress and the cost of your undertaking. Here are four steps that will get you there.

Refer to references

Whether you're searching for a primary or second mortgage, or a mortgage refinancing, you want a reputable company. Poll your friends, family, neighbors and co-workers who have recently bought homes. Ask them about their mortgage companies. Did they have a good experience? With a short list in hand, start calling the lenders. Local ones, familiar with the market, will be able to give more accurate estimates. Then search online for competitive offers to see if you can get a better deal.

Calculate the costs

Ask each lender about interest rates, points, and a list of fees and costs. Make sure that you ask each potential lender exactly the same questions. This way, when you're done, you'll be comparing apples to apples. Make all the calls within a couple of days to reduce the chance that a change in market conditions is causing differences in the answers.

Pay attention, do your research

Does the lender or broker seem to know his business? Will she answer all your questions? Are there signs that the operation is disorganized and inefficient? Is the lender or broker available when you call, and are your calls returned promptly? If you're uncomfortable, move on to someone else.

Ask for recent customers and check references. Search for information about a company at the Better Business Bureau.

Negotiate

Once you're sure that you have the right person for the job, negotiate for lower fees and interest rates. The lender's offer may include an "overage"-extra costs added to interest, points or fees-and that money goes into the loan officer's pocket after closing. Ask if anything can be cut or reduced. Then consider locking in the deal so that the mortgage rates can't rise while your loan is being processed.

Following your instincts and getting the information you need will help smooth the home mortgage process.