Shopping Mortgage Lenders 101: How to Avoid the B.S. and Secure the Best Loan

Thinking about buying or refinancing a home? The most important (and confusing) part of that journey often isn’t picking a property—it’s choosing the right mortgage lender. From gimmicky offers to fear-based tactics, there’s a lot of noise out there.

In this comprehensive guide, we’ll walk you through:

• The most common lender red flags
• What “free refinance” and “skip two payments” really mean
• How to compare quotes the right way
• How to avoid being manipulated
• A proven framework for finding a trustworthy lender

The Mortgage Lender Red Flags You Need to Know

You’ve probably heard them before:

• “We’ll get you the lowest rate—guaranteed!”
• “Don’t shop around—your credit score will tank.”
• “Lock it today or it’s gone!”
• “You’ll skip two payments!”
• “There are no out-of-pocket costs.”

These lines are designed not to educate, but to manipulate.

According to Josh Lewis, seasoned mortgage broker and co-host of The Educated Homebuyer, these claims often come from the bottom 80% of the industry—people who are new, indifferent, or intentionally misleading.

Red Flag #1: “We’ll Refinance You for Free!”

There’s no such thing as a free lunch—and there’s definitely no such thing as a truly free refinance.

• Loan officers often bake the costs into your interest rate
• Or they roll the costs into your loan balance

Even waived fees don't remove escrow, title, appraisal, etc. Someone always pays.

Red Flag #2: “Don’t Shop Around—It’ll Hurt Your Credit”

This is fear-based manipulation. The CFPB says you have 45 days to shop without credit score damage.

Just limit it to 2–3 lenders for clarity. Avoid spammy lead-gen websites.

Red Flag #3: “We Have the Lowest Rate Anywhere”

All brokers access similar wholesale rates. If someone’s rate is drastically lower, ask what it costs to get that rate.

Use Mortgage News Daily or Optimal Blue to benchmark rates.

Red Flag #4: “Lock It Now or Lose It”

Rates do fluctuate, but high-pressure locking is a sales tactic. Ask for market data if urgency is pushed.

Red Flag #5: “You’ll Skip Two Payments!”

You’re not skipping payments. Interest accrues and is just rolled into your loan.

Red Flag #6: “You’ll Get Your Escrow Refund!”

You will, but you’ll need to re-establish a new escrow account—either out of pocket or rolled in.

How to Actually Shop for a Mortgage the Right Way

✅ Step 1: Understand Your Own Goals

• Purchase price & budget
• Down payment amount
• How long you’ll keep the loan/home

✅ Step 2: Talk to 2–3 Types of Lenders

• Independent broker
• Bank or direct lender
• Credit union

✅ Step 3: Get Transparent, Side-by-Side Quotes

Always compare:

• Rate
• Points
• APR
• Loan estimate

✅ Step 4: Work With Advisors, Not Salespeople

Your lender should ask about your life goals, financial situation, risk tolerance.

✅ Step 5: Use Trusted Rate Tools

• Mortgage News Daily
• Optimal Blue

Special Considerations for Refinancing

• Weigh savings of 28-year vs. 30-year terms
• Only pay points if long-term savings justify it
• Don’t restart the clock just for minor payment reduction

Work With Lenders Who Put Education First

You deserve a mortgage lender who’s a guide, not a salesperson.

At The Educated Homebuyer, our mission is simple:

• Educate you.
• Empower you.
• Help you make smart mortgage decisions.

👉 Click here to start the process

Which Sales Pitch Have You Heard Before?

Let us know in the comments: Which of the sales tactics in this article have you heard recently?

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📺 Shopping Mortgage Lenders 101: Watch it here

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