Are you wanting to buy a home?  Whether you are a first-time buyer, or you already own a home, the first thing you should do is get pre-approved for a mortgage before talking to a real estate agent or even shopping for a home online.  Most real estate agents will not work with you until you are pre-approved.  It also helps you understand what price range you can afford, how much money you will need for a down payment and closing costs, as well as what to expect for a house payment.

Picking the right mortgage company begins with having an idea what kind of mortgage you want.  Pretty much every lender can handle Conventional and FHA loans, but if you’re considering a VA or USDA loan, you want to make sure the lender has experience with these loans to prevent any issues or delays with your mortgage.  VA and USDA have the lowest amount of money up front, but you must be a veteran to qualify for a VA loan and USDA loans are only available for more rural developments.  FHA vs Conventional really depends on your financial situation.  Conventional usually requires more money down and you may be required to pay for PMI, Private Mortgage Insurance, until you reach a certain percentage of equity.  FHA usually has a lower down payment and lower interest rate, but you will be paying MIP, Mortgage Insurance Premium, for the entire duration of the loan.

After you have an idea what type of mortgage you need, or, if you are unsure which mortgage is right for you, it’s time to contact mortgage companies.  Generally, it’s better to work with a mortgage company rather than a bank.  The process is typically much faster, they usually provide more one-on-one time, communication is usually much better, and they generally feel more like someone on your team.  Mortgages are their only business, so they do it well.  Larger banks offer mortgages, but the personnel that will be working on the mortgage through its various stages, are generally spread out through different locations, which increases the amount of time it takes to process a mortgage and communication suffers as well.  Online mortgage companies offer a similar experience as you would have with a bank.

Knowing if you are working with a good lender is difficult.  A good lender will treat you like a human first. After your first conversation, you should have a positive sense that they care about you and your home purchase.  They should help you understand not just your rate and payment, but they should help you understand the overall process. Their tech should make your life easier and make the process flow smoothly.  The right technology means you can easily upload information, get notifications the instant your application has reached the next stage, and always know where you are in the process.

A good lender will communicate early and often.  Technology is great, but sometimes you do want to talk directly to a person–you should feel comfortable with your loan officer.  They will also prioritize speed. The right lender can be a difference-maker in a competitive bidding situation if the seller is looking for a quick close, or you may have a specific timeline when you need to move.

Here are some common red flags:  They focus on selling first and their pitch makes you feel like everything is too good to be true—are they honestly trying to educate you or are they just making you feel good to win your business.  You may walk away with more questions than answers.  They rush through conversations and may tell you not to worry, that you don’t need to understand what’s happening.

There may be a large gap in communication and your realtor will call you for updates instead of receiving them from the lender.  You may leave messages and not receive a response for days, leaving you unsure about the next step.  They will use smoke and mirrors to get your business, like promising interest rates without asking for a full application and credit report.  Their rates may be vastly different than other lenders.  You may find their only claim to fame is their rating on NerdWallet or LendingTree, where they can pay to have their company featured and promoted.  They may take issue with you shopping around.  They may also make you feel like you’re on your own, especially if you’re not ready to buy right now and just put you on an email list, leaving you to figure it out on your own.

Overall, the right lender will be knowledgeable and help you figure out the right type of mortgage that works best for your situation and they should have experience with that type of mortgage.  They should make you feel well-informed and not pressured.  Communication will be easy, and you should always feel up to date with the status of your loan.  The lender should prioritize time and handle things quickly.  You should feel comfortable with your lender and confident about working with them.