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Most of us have a general idea of what it takes to obtain a loan. You fill out a form that asks the usual questions: How much do you make? What are your expenses? What other assets do you have? What does your credit history look like? In the case of mortgages, loans are tied to the property, so lenders will do their due diligence on the property to ensure they’re not buying a hunk of junk (or if they are, to make sure you’re not overpaying for that hunk of junk using their funds). The type of loan generally dictates how stringent the strings attached to the loan are.

Unfortunately, the borrowing process can be time consuming, headache inducing, and stressful, but technology is improving what was once a painful experience. The process involves submitting an application with your financial information, the lender verifying that information, the lender providing you with a document acknowledging your eligibility for a loan so that you can include it in your offer to sellers. None of this even guarantees that you'll be approved for a loan! After you come to an agreement with a seller, the lender will also investigate the property you plan to purchase by way of an appraisal. 

Throughout the verification process, a loan officer will generally ask for ample documentation to support your statements, including tax returns, pay stubs, bank statements, etc. before they approve you.

When it comes to loans, lenders call the shots, and all terms are in their favor. Interest rates are not negotiable, although you may buy them down if you so choose. You can’t personalize the length of your loan (other than selecting from the few standard industry options), you can’t transfer the mortgage on your house to someone else if you decide to move, you can’t prepay mortgage payments for any length of time, and you don’t have a say in what the lender mandates at closing, such as the requirement to purchase Title Insurance–on the lender’s behalf.

If you don’t like it, too bad; take it or leave it.

The most common types of loans offered for residential properties are 15-year fixed rate, 30-year fixed rate, and 3- and 5- year Adjustable Rate Mortgages (ARMs), although the latter became much less common after the 2008 Financial Crisis. Conventional loans are fixed rate, amortizing loans with a consistent monthly payment over the life of the loan. The key differences between the two amortizing loans are the lengths of the mortgage and the interest rate.

After you officially apply, the lender will pull a hard credit inquiry before approving you for a loan, and yes, that will slightly negatively affect your credit. Your credit score will not, however, be repeatedly docked for applying to multiple lenders within a 30 day period, so we recommend obtaining quotes for interest rates from multiple lenders before deciding on any one.

Talk to lenders until you're satisfied that you're getting a good rate. Your loan will likely be managed by a mortgage servicer after you close, so your relationship with any one lender will likely be short-lived. There are certainly some great lenders who can offer more personalized guidance for a higher rate, but if you're looking for the best deal, go with the lowest interest rate. It could be worth $10,000-20,000.

The U.S. Department of Housing and Urban Development (HUD) created this handy pamphlet with questions to ask lenders in order to compare costs. There is other helpful, miscellaneous information on the HUD website, which you can find by clicking around here.

The most competitive rates we've seen are online, presumably because they aren't burdened by the overhead costs that traditional brick-and-mortar banks have.