Comparing mortgage lenders: what you need to know
Key takeaways
- A down payment is the upfront portion of a home purchase price and can affect your loan options, borrowing costs, and monthly mortgage payment.
- The amount needed for a down payment varies by loan type, and some mortgage programs allow qualified borrowers to purchase a home with a relatively low down payment.
- Down payment assistance programs, eligible gift funds, and other assistance resources may help reduce the amount of cash needed upfront.
- The right down payment depends on your budget, financial goals, available savings, and the mortgage program you choose.
Start with your bank
When you start your homebuying journey, talking with more than one lender can help you to determine the loan options and programs that best fit your unique situation and financial goals.
As you build your list of lenders, check if your current bank offers home loans. National banks like Wells Fargo often create exclusive offers for their existing customers. They may also offer unique loan products or incentives, such as low-down payment loans, closing cost incentives, and special homebuying programs for first-time homebuyers.
Still unsure about which lender to work with? Ask your personal network of friends and family for referrals.
How to evaluate different lenders
As you start your research and obtain lender recommendations from your trusted network, your lender list is likely to include five common types of mortgage lenders:
- National banks
- Regional and community banks
- Credit unions
- Mortgage brokers
- Online-only mortgage lenders
While there may be universal federal guidelines for mortgage loans, lenders are unique. Some lenders only offer certain types of loans, some may offer varying services, and some may offer a suite of special first-time homebuyer programs or closing costs grants.
One way to evaluate your mortgage options and lender list is to understand the key differences between each type.
National banks
Banks are the most common type of mortgage lender.
Products
Services
National banks often offer a complete suite of financial products. If you already have a checking or savings account through a national bank, getting your mortgage from the same place can also be convenient, because you can manage your bank and mortgage accounts in one place.
While national banks offer online loan management, they may also have many brick-and-mortar branches, which can be more convenient if you prefer to manage your banking needs in person versus over the phone or online.
Regional and community banks
A few key differences between regional and community banks are the geographical service area, number of branches, products offered, and total assets.
Products
Services
Credit unions
Credit unions are non-profit financial institutions. Unlike banks, credit unions are owned by members and are exempt from federal taxes. You must be a member of a credit union to access their products and services.
Products
Services
Mortgage brokers
Mortgage brokers are not lenders. Instead, they’re licensed professionals who seek out the loans and terms that best fit your needs.
Products
Services
Online-only mortgage lenders
Online-only mortgage lenders are different from banks and credit unions because they may not offer other financial products.
Products
Services
Banks are the most common type of mortgage lender.
Products
Services
National banks often offer a complete suite of financial products. If you already have a checking or savings account through a national bank, getting your mortgage from the same place can also be convenient, because you can manage your bank and mortgage accounts in one place.
While national banks offer online loan management, they may also have many brick-and-mortar branches, which can be more convenient if you prefer to manage your banking needs in person versus over the phone or online.
A few key differences between regional and community banks are the geographical service area, number of branches, products offered, and total assets.
Products
Services
Credit unions are non-profit financial institutions. Unlike banks, credit unions are owned by members and are exempt from federal taxes. You must be a member of a credit union to access their products and services.
Products
Services
Mortgage brokers are not lenders. Instead, they’re licensed professionals who seek out the loans and terms that best fit your needs.
Products
Services
Online-only mortgage lenders are different from banks and credit unions because they may not offer other financial products.
Products
Services
Key areas when comparing lenders
Where does the loan officer come in?
Once you've evaluated lenders and narrowed down your list, you may be ready to submit a loan application. During this phase you will be assigned a loan officer who will answer your mortgage questions and explain what documentation and paperwork you'll need to provide. Your loan officer will also do a considerable amount of work behind the scenes to ensure your homebuying experience runs smoothly.
Tips to get the most from your relationship with your loan officer.
- Engage your loan officer early. Add a loan officer to your team early in the process, even before you fall in love with a home. This will help avoid the disappointment of potentially not being able to secure the financing you need to afford that home.
- Set your budget. Be upfront about the monthly mortgage payment you can confidently afford and the amount you have budgeted to cover your origination fees and closing costs. This will ensure your loan choices align with your financial goals.
- Set your methods of communication. Tell your loan officer the best method and times to contact you. This will help ensure you submit the proper documents and respond to questions about these documents in a timely manner, which will avoid delays in securing a full loan approval.
- Ask questions. Always review your Loan Estimate document and ask about any loan details you do not understand. Don't sign it until you’re confident you understand the answers to your questions. Understanding your loan details ensures a smoother transaction.
When you engage with a mortgage lender as soon as you start your home search, you’re ensuring you have the most up-to-date information and details about your borrowing options and can confidently focus on homes that fit your budget and financial goals.
Talk to a mortgage consultant
Call us
1-877-510-2079
Mon – Fri: 7 am – 8 pm
Sat: 8 am – 6 pm
Central Time
Marque 9 para recibir atención en español.
Let us contact you
Enter your contact information to have a mortgage consultant call you.
Find a consultant
Use our locator to search for mortgage consultants in your area.
How was your experience? Give us feedback.
The Homebuyer Access® grant may help customers purchase a home by providing a grant for a down payment, subject to eligibility requirements. Grant funds cannot be used in connection with the financing of a Wells Fargo real estate owned (REO) property purchase. Repayment is not required for the grant. To use the grant, the full award amount must be applied toward the down payment. We cannot apply less than the full amount. The down payment grant is available in certain areas. Eligibility for grant money will not be confirmed until underwriting is complete.
Eligibility requirements:
Loan type: The grant may be used with a Wells Fargo fixed-rate conventional loan only. Loan types, such as non-conforming loans, government loans, and conventional adjustable-rate mortgages, are not eligible.
Income: There will be income limitations based on where the subject property is located.
Location: The borrower's verified current permanent residential address must be located in an eligible area or the subject property the borrower is purchasing must be located in an eligible area.
Occupancy: The borrower must occupy the subject property they are purchasing as their primary residence.
Possible tax implications: Accepting and using grant funds may be considered additional taxable income and will be reported on Form 1099-MISC for the primary borrower (the first person listed on the loan) on the application. This means the borrower may owe taxes on that additional income. The grant funds received may also affect any eligibility for income-based assistance, such as government programs like student loan payment relief or other government payments that may be based on income. Before accepting this grant, customers should consider speaking with a tax advisor to understand if their taxes may be affected by this grant.
The Dream. Plan. Home.® closing cost credit may help eligible consumers purchasing their primary residence. Income limits may apply based on the property location. The closing cost credit is available in certain areas and is not available with all loan types.
Wells Fargo Home Mortgage is a division of Wells Fargo Bank, N.A.
DT1-08132027-12-9075518-1.1
