While I feel like a lot of sources out there make it seem like there are limitless options for who to get a mortgage from, and thus all the more pressure to make the right choice, at least in my situation I was pleasantly surprised to find it to be a lot less complicated than I had anticipated to settle on a lender.
Who to work with is pretty much going to be based on who has the best rate. That’s it. Allowing, of course, for wanting to make sure you’re working with someone who has the time for you and who can explain things in ways you understand, but I think all lenders would be motivated to do those things.
So how do you get the best rate? You either have to put in the time yourself, by getting referrals from people or looking up contact info for lenders, and then calling them all, or you can hire a mortgage broker to do all that for you. Mortgage brokers and mortgage lenders are not the same thing—no matter what, mortgage lenders are the people with whom you will apply for a loan. You can call them directly and ask them what their rate is (rates change every day, but they are used to people calling back daily to check), or you can contact them indirectly through a broker.
Mortgage brokers are people who have relationships with lenders and may be able to negotiate a slightly better rate for you and save you the time of researching what’s out there—but they charge a fee for their services. So in the end, you may not save more by using them; you may actually pay more than if you had done the work yourself.
In my mind, doing the work of making the calls myself was an easy decision, one, because I wanted to save money, and two, because I like to learn about and understand a new process I’m engaging in. If you go this route, you need to clarify with the representatives that you’re talking to that they are lenders, not brokers, and that there will be no fee for their services outside of the usual fees associated with the loan itself.
In a nutshell, this decision boils down to time, motivation to learn about the process, and money: you have to decide which of these matter most to you, and that will guide your choice.
Bonus: since I did the legwork myself, I can share a tip with you from personal experience that confirms something I read in Home Buying for Dummies. Despite what you might intuitively think, big name banks actually tend to have worse rates than smaller local lenders. Even if you’re a long-time customer. Credit unions, though, tend to have competitive rates, but local lenders can sometimes still do better. So definitely expand your search beyond your bank!