This Was the Most Important Factor in Choosing My Mortgage Lender

Recently, I shopped around for a mortgage loan. I am buying a home and I'm borrowing to do it, so I wanted to get the best loan for my situation. 

When I was comparing lenders, there was one factor I focused on above all else. (And if you're buying a home in the near future, don't forget to prioritize this factor yourself.)

My most important criteria for picking a mortgage lender

When I picked my mortgage lender, what I focused on most was the interest rate that I would be charged for the loan. 

There are a few reasons why this mattered so much to me:

• The interest rate determines how much my loan will cost me over time. I wanted to make sure I was paying the lowest amount possible.
• Customer service isn't a big factor. I know many mortgage lenders end up re-selling the loans -- sometimes multiple times. Even if I spent time looking for a bank or mortgage company with a great reputation for taking care of its customers, there was no guarantee it wouldn't sell the loan quickly to a lender I didn't like at all. 
• I knew I could qualify for a loan with any lender. I have good credit, was making a large down payment, and my payment is well within the allowable limits based on my income, so I didn't really have to worry whether I would meet my lender's criteria.  

For these three reasons I had the luxury of being able to focus on interest rates. If you are applying for a government-backed loan (such as an FHA loan) or if your financial credentials aren't perfect, you may need to prioritize picking a lender that provides the type of loan you need and that will actually loan money to someone in your specific circumstances. 

But if you are well-qualified, you'll likely want to focus on the interest rate as the most important factor as well. 

Why does interest matter so much when you're picking a mortgage lender?

The rate of interest you end up paying on a mortgage loan makes a huge difference in monthly payments and total costs over time -- especially since you are likely borrowing hundreds of thousands of dollars over many decades. 

If you have even a small difference in the rate you're offered from one lender to another, it can have a big impact. Check out the table below. It shows how much your monthly payment and total interest costs would be over time at different rates for each $100,000 in mortgage debt you take on: 

You don't want to waste money if you can get a lower rate, so be sure to make this a key criteria when you look for a home loan of your own. Get several quotes from different kinds of lenders, including banks, credit unions, and online mortgage companies, and be sure you're focused on rate and total borrowing costs over time so you can get the right loan for you.