For homebuyers who are looking for a new mortgage and homeowners wanting to refinance, the challenge isn’t finding a mortgage lender, but sorting through all of the banks, online lenders and mortgage brokers who are eager to take their loan application. In fact, sifting through all of the available options can be daunting, at best. In today’s financial environment, it’s even more important to work with a company that can aptly address a homeowner’s specific home loan needs and desires.

When choosing a lender for a home purchase or refinance, there are several factors to consider. To begin, where you get your home loan matters—it’s not just about the rate. Homeowners should choose a lender with a solid performance history for making smart loans, a lender with reputable lending practices, and one who is accountable for the loans they make.

There are several questions you should ask in order to make a smart lender decision. For example:

• Will you take time to find the right loan option for me?
• Who prepares the loan documents?
• Who regulates the lender?
• Will the lender sell either the loan or servicing of the loan, and if so, to whom?

Additionally, borrowers should keep in mind that banks differ from brokers in terms of the loan rates they offer. Brokers may be able to provide what appear to be lower rates, but they can also contain questionable terms that are unfavorable for the customer. Make sure you understand all of the fees your lender is collecting; sometimes a lower rate is offered, but the fees are much higher. Brokers often sell the loans they generate after the customer has closed, in the end, leaving the customer unsure of whom they are dealing with after the sale is complete.

Beyond speaking with the particular lender, consumers are advised to perform a little investigative work on their own, such as consulting the Better Business Bureau to verify if a particular lender is in good standing and to find out if any complaints have been filed against them. It is also prudent to check with a title company and ask if the lender has a reputation for increasing rates or fees at closing, or if they are aware of any unethical or fraudulent behavior on the part of the lender in order to close a loan. Regardless of whether a mortgage customer is buying a new home or refinancing, taking the time to research and feel comfortable with lender options is worth the effort. iBi

Sandra Beneventi is executive vice president of retail administration at Commerce Bank.