In my opinion, your objective in shopping for a mortgage should be good service with a competitive price. On service, you should evaluate these issues: Is the lender trying to help meet your needs, or do they seem to be steering you toward products that they want to push? Is the lender following through on promises to deliver information? Is the lender making the application process easy or difficult for you?
What I mean by a "competitive price" is a combination of interest rate, points, and origination fees that is close to the lowest available. Once you have a competitive price, the difference between that and the best possible price will be small. However, if you do not have a competitive price, you can pay much more than necessary for a loan.
To obtain a competitive price, you must let your lender know that price is important to you, and you must check prices with more than one lender. Just because a lender is recommended by a friend, your employer, or a real estate agent does not mean that the lender is going to give you a competitive rate. If the lender believes that you are a "captive" borrower (not shopping for the best rate), the rate you are offered may not be competitive.
Can you find a mortgage on line? Yes. There are hundreds of mortgage lenders with Internet "storefronts" of some sort. Some of the lenders have complained a bit about the amount of price sensitivity of Internet borrowers, but to me that's a sign that on-line mortgage shopping is working.
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