Choosing a Lender: How to Compare and Find the Best Mortgage

Your coworker used Rocket Mortgage. Your neighbor swears by BECU. Your real estate agent recommends a local broker. Who should you choose?

The lender you choose can make a $10,000-20,000 difference in closing costs and save or cost you $50-100 per month in interest. In Seattle's market, where you're borrowing $650,000-750,000, choosing the right lender matters.

Types of Lenders
How to Compare Lenders
Questions to Ask Lenders
Red Flags to Watch For
Seattle-Specific Considerations
How Many Lenders to Shop
Summary: Key Takeaways
Next Steps

Types of Lenders

Big National Banks

Examples: Chase, Bank of America, Wells Fargo, US Bank

Pros:

Established reputation
Branch locations for in-person service
Full-service banking (checking, savings, mortgage)
May offer relationship discounts
Strong technology platforms

Cons:

Higher rates (0.25-0.5% more than best options)
Higher fees ($2,000-4,000 in lender fees)
Less flexible underwriting
Slower processing (30-45 days typical)
Less personal service

Best for:

Buyers who value brand recognition
Existing customers with relationship discounts
Simple, straightforward loans

Seattle reality: National banks are convenient but rarely the best deal. Tech workers with complex income (RSUs) may find them inflexible.

Local/Regional Banks

Examples: Umpqua Bank, Banner Bank, Columbia Bank

Pros:

Local market knowledge
Faster processing than national banks
More flexible underwriting
Personal service
Competitive rates

Cons:

Fewer branch locations
Less name recognition
May have lower loan limits
Technology may lag big banks

Best for:

Buyers wanting local service
Complex income situations
Jumbo loans (some specialize)

Seattle options:

Umpqua Bank (strong Pacific Northwest presence)
Banner Bank (Washington-based)
Columbia Bank (local, competitive rates)

Credit Unions

Examples: BECU, Verity Credit Union, Sound Credit Union

Pros:

Lowest rates (often 0.25-0.5% below banks)
Lower fees ($500-1,500 vs $2,000-4,000)
Member-focused (not profit-driven)
Flexible underwriting
Excellent customer service

Cons:

Must be member (usually easy to join)
May have loan limits
Fewer branch locations
Technology may be basic
Slower processing sometimes

Best for:

Price-conscious buyers
First-time buyers
Buyers with good credit

Seattle credit unions:

BECU (Boeing Employees Credit Union):

Largest credit union in Washington
Anyone in WA can join ($5 membership)
Competitive rates
Strong tech platform
Excellent reputation

Verity Credit Union:

Seattle-based
Easy membership
Very competitive rates
Good for first-time buyers

Sound Credit Union:

Puget Sound area
Competitive rates
Good customer service
Strong local presence

Pro Tip: BECU is often the best deal for Seattle buyers. Rates are typically 0.25-0.375% lower than banks, and fees are minimal.

Mortgage Brokers

What they do: Shop your loan to multiple lenders (banks, credit unions, wholesale lenders)

Pros:

Access to many lenders (20-50+)
Can find best rate/terms for your situation
Handle complex scenarios (self-employed, multiple income sources)
Save you time shopping
Often get wholesale rates

Cons:

Broker fee (0.5-1% of loan, or lender-paid)
Less control over which lender
May push you to lenders that pay them more
Quality varies by broker

Best for:

Complex income (self-employed, RSUs, multiple jobs)
Credit issues (need creative solutions)
Jumbo loans (brokers have more options)
Buyers who want someone to shop for them

How brokers get paid:

You pay: 0.5-1% of loan ($3,500-7,000 on $700,000 loan)
Lender pays: Broker gets commission from lender
Combination: Some from you, some from lender

Important: Ask how broker is compensated. If lender-paid, broker may steer you to lenders paying higher commissions.

Seattle brokers: Many excellent local brokers. Ask your real estate agent for recommendations. Look for brokers experienced with Seattle's high-price market and tech worker income.

Online Lenders

Examples: Rocket Mortgage (Quicken), Better.com, LoanDepot

Pros:

Fast pre-approval (minutes online)
Competitive rates
Low fees
Convenient (all online)
Good technology

Cons:

Less personal service
Harder to reach someone with questions
May not understand local market
Less flexible with complex situations
Can't meet in person

Best for:

Tech-savvy buyers
Simple, straightforward loans
Buyers who prefer online process

Seattle consideration: Online lenders work well for W-2 employees with straightforward income. Tech workers with RSUs may need more hand-holding.

How to Compare Lenders

Don't Just Compare Rates

What to compare:

Interest rate
APR (includes fees)
Lender fees
Points/credits
Closing timeline
Customer service
Loan programs available

The Loan Estimate

What it is: Standardized form lenders must provide within 3 business days of application

Key sections:

Page 1 - Loan Terms:

Loan amount
Interest rate
Monthly principal & interest
Prepayment penalty (should be "No")
Balloon payment (should be "No")

Page 2 - Closing Costs:

Origination charges (lender fees)
Services you cannot shop for (appraisal, credit report)
Services you can shop for (title, escrow, inspection)
Taxes and government fees
Prepaids (insurance, taxes, interest)
Initial escrow payment

Page 3 - Comparisons:

Total closing costs
Cash to close
APR
Total interest percentage (TIP)

Real Comparison Example

Lender A (Big Bank):

Rate: 6.75%
APR: 6.95%
Origination: $3,500
Points: 0
Other fees: $1,200
Total lender costs: $4,700
Monthly payment: $4,540

Lender B (Credit Union):

Rate: 6.5%
APR: 6.65%
Origination: $995
Points: 0
Other fees: $500
Total lender costs: $1,495
Monthly payment: $4,425

Lender C (Broker):

Rate: 6.625%
APR: 6.75%
Origination: $0
Points: 0
Broker fee: $2,500
Other fees: $800
Total lender costs: $3,300
Monthly payment: $4,480

Analysis:

Lender B: Best rate, lowest fees, lowest payment
Saves $115/month vs Lender A = $41,400 over 30 years
Saves $3,205 in upfront costs vs Lender A
Winner: Lender B (Credit Union)

Questions to Ask Lenders

About Rates and Costs

"What is your interest rate today for my situation?"

Get specific rate for your credit score, down payment, loan amount
Rates change daily
Ask if rate includes points

"What is the APR?"

APR includes fees, better comparison than rate alone
Lower APR = lower total cost

"What are your lender fees?"

Origination fee
Processing fee
Underwriting fee
Application fee
Total lender fees should be under $2,000

"Are there any points or credits?"

Points increase upfront cost but lower rate
Credits reduce upfront cost but increase rate

"What are the total closing costs?"

Get full estimate including title, escrow, prepaids
Should be 2-3% of purchase price in Seattle

About Process and Timeline

"How long does your process take?"

Pre-approval: Same day to 3 days
Full approval: 2-3 weeks after offer acceptance
Closing: 30-45 days total typical

"What documents do you need?"

Pay stubs (2 recent)
W-2s (2 years)
Tax returns (2 years if self-employed or RSUs)
Bank statements (2 months)
RSU vesting schedule (if applicable)

"Do you close on time?"

Ask about their on-time closing rate
95%+ is good
Under 90% is concerning

"Who will be my point of contact?"

Loan officer
Processor
Underwriter
How to reach them

About Loan Programs

"What loan programs do you offer?"

Conventional
FHA
VA
Jumbo
Which is best for my situation?

"Do you have experience with [my situation]?"

Tech worker with RSUs
Self-employed
H-1B visa holder
First-time buyer
Jumbo loans

"Can you handle Seattle's high-price market?"

Jumbo loan experience
Understanding of local market
Relationships with local appraisers

About Service

"Will you sell my loan?"

Most lenders sell loans to Fannie Mae/Freddie Mac
Servicing may transfer (who you make payments to)
Doesn't affect loan terms

"What happens if rates drop before closing?"

Can you relock at lower rate?
Float-down options?
Cost to relock?

"What if closing is delayed?"

Rate lock extension policy
Cost to extend
Who pays for extension

Red Flags to Watch For

Pressure Tactics

Red flags:

"Rates are going up, you must lock today"
"This is the best deal you'll find"
"Don't shop around, you'll hurt your credit"
"You need to decide right now"

Reality: Multiple mortgage inquiries within 45 days = 1 inquiry on credit. You should shop 3-5 lenders.

Unclear Fees

Red flags:

Won't provide Loan Estimate
Vague about fees
Fees much higher than competitors
Hidden fees appear at closing

Reality: Lenders must provide Loan Estimate within 3 days. All fees should be clearly listed.

Too Good to Be True

Red flags:

Rate significantly lower than competitors (0.5%+)
"No closing costs" (costs rolled into loan or rate)
Promises that seem unrealistic
Guaranteed approval without reviewing finances

Reality: Rates are competitive across lenders (within 0.25%). If it sounds too good to be true, it probably is.

Poor Communication

Red flags:

Takes days to respond
Doesn't answer questions clearly
Passes you between multiple people
Unavailable when you need them

Reality: Good lenders respond within 24 hours and should have direct contact with loan officer.

Seattle-Specific Considerations

Jumbo Loan Experience

Why it matters:

Most Seattle/Eastside homes require jumbo loans
Jumbo loans have stricter requirements
Not all lenders offer competitive jumbo rates

Questions to ask:

"What percentage of your loans are jumbo?"
"What are your jumbo loan rates today?"
"What are your jumbo loan requirements?"

Best jumbo lenders in Seattle:

BECU (competitive jumbo rates)
Local mortgage brokers (access to multiple jumbo lenders)
Some credit unions (Verity, Sound)

Tech Worker Income

Why it matters:

RSU income is complex
Stock volatility affects qualification
Not all lenders understand tech compensation

Questions to ask:

"Do you have experience with RSU income?"
"How do you calculate RSU income?"
"What documentation do you need for RSUs?"

Best lenders for tech workers:

Lenders near tech hubs (Bellevue, Redmond, Seattle)
Mortgage brokers (more flexible)
Credit unions (BECU has lots of tech members)

Condo Financing

Why it matters:

Many Seattle condos are non-warrantable
Not all lenders finance non-warrantable condos
Rates may be higher for condos

Questions to ask:

"Do you finance condos?"
"Do you finance non-warrantable condos?"
"What are your condo requirements?"

Best lenders for condos:

Portfolio lenders (keep loans, more flexible)
Credit unions (more flexible than banks)
Mortgage brokers (can find specialty lenders)

How Many Lenders to Shop

The Sweet Spot: 3-5 Lenders

Why 3 minimum:

See range of rates and fees
Understand what's competitive
Leverage for negotiation

Why not more than 5:

Diminishing returns
Time-consuming
Confusing to compare too many

Good mix:

Credit union (BECU or Verity)
Local bank or broker
Online lender (Rocket, Better)
Your current bank (if relationship discount)
Agent's recommendation (if different from above)

Timing

When to shop:

3-6 months before buying (get pre-approved)
When you find a home (get final quotes)
Before rate lock (compare one more time)

How long it takes:

Initial quotes: 1-2 days
Loan Estimates: 3 days after application
Comparison: 1-2 days
Total: 1 week to shop properly

Summary: Key Takeaways

Shop 3-5 lenders—credit union, local bank/broker, online lender
BECU often best for Seattle—lowest rates and fees for most buyers
Compare APR, not just rate—APR includes fees for true cost comparison
Get Loan Estimates—required within 3 days, standardized for comparison
Ask about experience—jumbo loans, tech income, condos if applicable
Watch for red flags—pressure tactics, unclear fees, poor communication
Mortgage brokers—good for complex situations (self-employed, RSUs, credit issues)
Don't rush—take 1 week to shop properly, can save $10,000-20,000

Next Steps

Make list of 3-5 lenders to contact
Gather documents—pay stubs, W-2s, bank statements, tax returns
Contact lenders—request rate quotes for your situation
Apply to top 2-3—get Loan Estimates
Compare Loan Estimates—use APR and total costs
Check references—ask agent, read reviews
Choose lender—based on rate, fees, service, and comfort level
Get pre-approved—submit full application

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This article provides general information about choosing a lender and should not be considered financial advice. Rates, fees, and lender offerings change frequently. Shop multiple lenders and compare Loan Estimates for your specific situation.