Tips for shopping for a mortgage

When you imagine your dream home, you probably think about the kitchen or bathrooms or outdoor space – you’re probably not daydreaming about your mortgage. However, shopping for a mortgage shouldn’t be overlooked in the house hunting process, and there’s much more to shopping for a mortgage than just doing a Google search and finding the lender with the lowest rates.

We consulted with Alliant’s mortgage loan officer experts to compile some tips to help guide you.

How to get mortgage quotes

Before you start shopping for a mortgage, you’ll need to put together some basic but pertinent information to make it easier to get mortgage quotes. First and foremost, figure out the maximum purchase amount you can afford – use a simple mortgage calculator to help you – and your estimated down payment amount. Note that lenders typically price their mortgage loan programs based on your down payment percentage (0%, 3%, 5%, 10% and 20% or above), not the actual dollar amount.

Next, you’ll want to know an estimated timeframe when you plan to purchase your new home, the property type you’re interested in, such as a single family home or condo, and whether you’ll be using the property as your primary residence, a vacation home or an investment property. And of course, you’ll want to know your credit score.

How many mortgage quotes should you get?

Some lenders may perform a hard credit inquiry when you ask a mortgage rate quote, which could negatively impact your credit score. However, there are plenty of lenders that will give you a rate quote without a hard credit pull, and if that’s the case, there’s no harm in getting multiple mortgage quotes.

Because the process can feel overwhelming, start by getting quotes from three different lenders, plus your existing bank or credit union, if they offer mortgages. Also, each individual lender should give you multiple options to consider. Typically, a lender will show you their 30-year fixed mortgage rate, which is often the lowest, but if the loan officer has asked you questions and gathered information based on your specific situation, they should also be able to give you one or two alternatives to consider. For instance, they might give you an option between a 10-year adjustable rate and 30-year fixed rate.

How to compare mortgage quotes

In addition to looking at which lender can give you the best rate, there are several other factors to consider when shopping for a mortgage.  

Ask lenders about any fees they charge and estimated third-party costs, like appraisal or legal fees. For example, Alliant charges one flat fee for loan originations for all of its mortgage products, but some lenders break their fees into categories like origination, underwriting and processing.

Also, if you are putting down less than 20%, ask the lender if they require you to have private mortgage insurance (PMI) or to escrow funds for property taxes and home insurance into your monthly payments.

Keep in mind that lenders might also have programs that could offer you additional savings that aren’t reflected in their rate, such as the Alliant Home Rewards program, which gives you a cash back rebate up to $6,500 after closing.

Another consideration is the lender’s process. You want to make sure you close on time once you go under contract, so if the lender can’t lay out a streamlined process to ensure it will happen, that could lead to major headaches down the road.

Finally, it’s important not to discount customer service as a factor. Sometimes choosing a lender based solely on the lowest mortgage rate can backfire. Remember, you’re going to be working with this lender for a long time – years or even decades – so think about who you felt most comfortable with after having that initial mortgage quote conversation. Did you feel a genuine connection? Were they helpful in answering your questions and listening to your needs, or did they just give you a sales pitch? You definitely want to get a good rate on your mortgage and save money, but it might be worth a few extra dollars each month to know that your mortgage lender is trustworthy, reliable, communicative and has your best interests at heart.

Maggie Tomasek is the PR & Content Strategist at Alliant. She began her career as a journalist for newspapers in Utica, N.Y., Des Moines and Cincinnati before moving to Chicago in 2009. Maggie is an eight-time Chicago Marathon finisher and a lifelong creative writer with a passion for comedy. Her mom instilled in her a great sense of fiscal responsibility, and her big sister told her to throw that responsibility out the window every once in a while in the name of life experience. So far, that combination of financial advice has worked out pretty well for her.