How to Choose a Mortgage Lender: Steps, Tips & FAQs

Buying a home is one of the most exciting — and financially significant — milestones in life. Unless you're purchasing your home with cash, selecting the right mortgage lender is a crucial part of the journey. According to the NAR, 80% of homebuyers financed their home in 2023, which means choosing a reliable mortgage partner like Midwest Mortgage is more important than ever.

With countless lenders out there, it’s easy to feel overwhelmed. That’s why we’ve created this step-by-step guide to help you navigate the process and find a lender who aligns with your goals and financial needs.

What to Look for in a Mortgage Lender

When comparing mortgage lenders, here are the key traits Midwest Mortgage recommends you prioritize:

• Excellent Reviews & Reputation: A lender with consistently positive feedback from past clients is more likely to provide a smooth, stress-free borrowing experience.
• Clear Communication: You want a lender that keeps you informed at every step. At Midwest Mortgage, transparency is built into our process.
• Custom Solutions: Look for a lender that offers flexible loan options tailored to your unique situation — even if it means going the extra mile.
• Modern Tech: Time is money. Lenders with digital tools (like Midwest Mortgage’s streamlined online application) make it easier to apply, upload documents, and track progress.
• Full Transparency: A reputable lender will clearly outline interest rates, fees, and all loan terms up front — no surprises.
• Competitive Terms: Always compare lenders based on rates, fees, and overall loan value. Midwest Mortgage is proud to offer some of the most competitive terms in the market.

How to Find the Right Mortgage Lender in 7 Steps

1. Start with Online Research

Use Google and trusted mortgage comparison platforms to build a list of potential lenders. Check licensing with the Nationwide Mortgage Licensing System & Registry (NMLS) and read reviews. Midwest Mortgage proudly maintains a stellar rating and full licensure.

2. Get Recommendations from Homeowners

Ask friends, family, or coworkers who recently purchased a home about their experience with their mortgage lender. Real stories provide valuable insights — and we’re proud that many of our clients recommend Midwest Mortgage to their network.

3. Strengthen Your Financial Profile

Improving your credit score, saving for a down payment, and reducing debts can expand your loan options and result in better terms. Here’s a quick look at the typical requirements by loan type:

• Conventional Loan: Min. 620 credit score; 3% down; PMI if under 20% down.
• FHA Loan: 500–579 credit with 10% down; 580+ with 3.5% down; includes MIP.
• VA Loan (Midwest Mortgage offers VA loans): 580+ credit score; no down payment; includes funding fee.
• USDA Loan: Midwest Mortgage does not currently offer USDA loans.
• Jumbo Loan: Generally 680+ credit and at least 10% down.

4. Know Your Budget

Before applying, determine how much house you can afford and how much you’re comfortable paying each month. Most lenders won’t approve loans where housing costs exceed one-third of your gross income.

5. Compare Estimates from Multiple Lenders

Request loan estimates from at least three lenders. Each lender must provide a standardized three-page estimate within three business days of application — allowing you to compare interest rates, fees, and terms apples-to-apples. Midwest Mortgage offers a straightforward estimate process with no surprises.

6. Ask Questions & Negotiate

Don’t be afraid to ask about:

• PMI requirements
• Prepayment penalties
• Interest rate locks
• Points and fees
• Escrow options

At Midwest Mortgage, we encourage questions and are always open to discussing ways to make your mortgage more affordable.

7. Get Preapproved

Mortgage preapproval from Midwest Mortgage shows sellers you’re a serious buyer. We verify your credit, income, and assets to issue a conditional offer good for up to 90 days — helping you stand out in competitive markets.

Pro Tips for Choosing a Mortgage Lender

Watch for Scams

Mortgage scams, like wire fraud or bait-and-switch tactics, are unfortunately common. Protect yourself by:

• Verifying credentials (Midwest Mortgage is fully licensed and accredited).
• Avoiding unsolicited offers.
• Refusing to send money to unverified accounts.
• Rejecting lenders who can’t provide a legitimate loan estimate.

Know the Different Types of Mortgage Lenders

Understanding your options can help you make the right choice:

• Mortgage Bankers: Direct lenders (like Midwest Mortgage) that fund loans in-house.
• Mortgage Brokers: Match you with other lenders — may offer a wider range, but less direct control.
• Credit Unions: Non-profits offering loans to members, often with favorable terms.
• Online Lenders: Operate digitally, offering speed and often lower rates.
• Portfolio Lenders: Hold loans instead of selling them; offer flexibility but sometimes higher costs.

Bring the Right Documents

Speed up the mortgage process by having these ready:

• ID (Driver’s license or passport)
• Social Security number (for credit check)
• Proof of income (W-2s, pay stubs, tax returns)
• Employment and asset verification (bank/investment statements)

Don’t Overlook Customer Service

A low rate means little if your lender is unresponsive or unclear. At Midwest Mortgage, exceptional service is just as important as great terms.

Understand Closing Costs

These can total 3%–6% of the home price and include:

• Origination/application fees
• Underwriting and credit check fees
• Appraisal and title services
• Escrow and recording fees

Midwest Mortgage provides a detailed breakdown of all costs so you know exactly what to expect.

The Bottom Line: Choose a Mortgage Lender You Can Trust

Your home will likely be your largest financial investment — make sure your lender is worthy of that responsibility. At Midwest Mortgage, we’re committed to providing a transparent, responsive, and client-focused lending experience.

Ready to begin your homeownership journey? Contact Midwest Mortgage today and take the first step toward getting preapproved!

FAQs: Choosing the Right Mortgage Lender

1. When should I start talking to lenders?

As early as possible. Midwest Mortgage can help you understand your budget and improve your credit — even before you're ready to buy.

2. What should I do before meeting with a lender?

Check your credit, organize your financial documents, and learn about the types of loans available. We’re here to walk you through the rest.

3. What are red flags to watch for in a lender?

Avoid lenders with vague terms, poor communication, aggressive sales tactics, hidden fees, or refusal to provide a loan estimate. At Midwest Mortgage, we offer transparency from day one.

4. What questions should I ask a lender?