How to Compare Mortgage Lenders with Data

What HMDA Data Reveals About Lenders

Most people choose a mortgage lender based on an ad, a referral, or whoever their real estate agent suggests. HMDA data provides objective metrics that advertising never shows:

Approval/denial rate: What percentage of applicants actually get funded? Ranges from under 70% to over 95% depending on the lender.
Denial reason profile: WHY does this lender deny applications? If "credit history" is the top reason, they may have strict credit requirements. If "DTI" dominates, they may not be flexible on debt ratios.
Local activity: How many loans does this lender originate in your state, metro, or county? High local volume suggests market knowledge and competitive pricing in your area.
Loan type mix: Does the lender do FHA, VA, USDA loans, or only conventional? This determines which borrower profiles they can serve.

Search any lender on PlainLender to see these metrics, or browse by state to find the most active lenders in your area.

Step 1: Identify Active Lenders in Your Area

Start by finding lenders with significant origination volume in your state or metro. Local volume matters because:

Lenders familiar with your market know local property values and appraisal practices.
High local volume indicates competitive pricing, they're winning borrowers in your area.
Local lenders often have relationships with title companies and appraisers that speed closing.

Check your state page or metro page for the top lenders by volume.

Step 2: Compare Approval Rates

Among lenders active in your area, compare approval rates. Keep in mind:

A higher approval rate doesn't necessarily mean "easier" - it may mean the lender pre-screens effectively, only taking applications likely to succeed.
A lower approval rate doesn't mean "bad" - the lender may serve higher-risk borrowers who are more likely to be denied.
Compare approval rates for the same loan type (conventional vs. FHA) for a fair comparison.

The most useful comparison is between lenders offering the same loan type in the same geography. PlainLender's rankings help with this.

Step 3: Check Denial Patterns

Each lender's denial reason profile tells you about their underwriting priorities. If you know your potential weakness:

Borderline credit? Avoid lenders where "credit history" is the #1 denial reason, they're likely strict on scores.
High DTI? Look for lenders with lower DTI-related denial rates, they may have more flexible debt ratio thresholds.
Low down payment? Focus on lenders with strong FHA volume, they're experienced with low-down-payment borrowers.

Step 4: Get Multiple Quotes

After identifying 3-5 promising lenders through HMDA data analysis, get Loan Estimates from each. HMDA data helps you select who to apply to; Loan Estimates reveal the actual pricing. Compare:

Interest rate and APR (APR includes fees, giving a truer cost comparison)
Origination fees and lender credits
Third-party fees (appraisal, title, insurance)
Estimated monthly payment including taxes and insurance

The CFPB requires lenders to provide a standardized Loan Estimate within 3 business days of application, making side-by-side comparison straightforward.

Frequently Asked Questions

Should I use a bank, credit union, or mortgage company?

Each has advantages. Banks offer convenience if you already have accounts. Credit unions often have lower rates and fees. Mortgage companies (non-bank lenders) may be more flexible on underwriting and faster to close. HMDA data shows all three types, compare them on PlainLender by approval rates and volume in your area.

How many lenders should I apply to?

At least 3. Multiple mortgage inquiries within a 14-45 day window count as a single credit inquiry, so there's minimal credit score impact from shopping around. Research shows that borrowers who get multiple quotes save an average of $1,500+ over the life of the loan compared to those who accept the first offer.

Does a local lender matter?

For purchase mortgages, a local lender can be valuable, they know the local market, have relationships with local appraisers and title companies, and may be faster to close. For refinances, location matters less since there's no purchase transaction timing pressure. Check which lenders are most active in your county on PlainLender.

What does high loan volume mean about a lender?

High volume generally indicates competitive pricing (attracting more borrowers), established processes (efficiency), and market experience. However, very high volume can also mean longer processing times. Mid-size lenders sometimes offer the best balance of competitive rates and personalized service.

Are online lenders reliable?

Online-only lenders (Rocket Mortgage, Better, etc.) are legitimate, HMDA-reporting institutions. They often offer competitive rates due to lower overhead. The trade-off is less in-person support. Check their HMDA data on PlainLender, you can see their approval rates, denial patterns, and loan volumes just like any other lender.

What should I look for beyond the interest rate?

Closing costs (can vary by $2,000-$5,000 between lenders), lender fees, points, rate lock terms, processing speed (important for competitive purchase markets), and customer service. HMDA data shows approval rates and denial patterns, which indicate how lender-friendly the underwriting process is, but you'll need to get Loan Estimates from each lender for fee comparisons.

Sources

Consumer Financial Protection Bureau, HMDA Data, 2024
CFPB, Shopping for a Mortgage (consumerfinance.gov)

This content is for informational purposes only and does not constitute financial advice. Always compare Loan Estimates from multiple lenders before making a mortgage decision.