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Tuesday, December 30, 2014

What Type of Mortgage Lender is Right For You?

Before you choose a lender, you may want to know what type of loan products are available.  Reviewing these before you talk to lenders will make the conversation less intimidating and you will be more aware of the options you may be looking for... or missing out on.

What Mortgage Lender is Right For Me?
 A qualified residential mortgage company can suggest several ways to ensure you get the home of your dreams and provide advice regarding strategies such as pre-qualification, pre-approval, rate locks, and work with good real estate agents, home inspections and insurance providers.

  Residential mortgage companies should NOT be evaluated solely on their rates but consider that larger mortgage firms are able to leverage national operations to provide the best financing for their customers. Like any other field, economies-of-scale make a difference for lenders and borrowers alike.

Top residential mortgage companies evaluate applications on a case-by-case basis taking into account factors such as extenuating circumstances, long-term stability, community reputation and other variables.  Mortgage companies evaluate changes in circumstances such as income or just passage of time as well as good-faith efforts prior to foreclosure. People who have been cheated by unscrupulous lenders with adjustable rate mortgages may find little-to-no future penalty. These are the best companies to consult regarding residential mortgages. The test of quality is a often a test of time.

The residential mortgage market offers several unique structural, legal and procedural opportunities and restrictions. A company specializing in residential mortgages should always be preferred.

 So, which one is right for you? Let's take a look at the options.

 Mortgage banks 

A mortgage bank is a direct lender; that is, bank employees alone review your application and make the decision to lend you money. Typically, the bank will sell your loan on the secondary market. Benefits of a mortgage bank:
 Reliability: You probably know and trust your local mortgage bank. It is regulated by state and federal agencies and likely has strong ties with your community.
One-stop shopping: You deal directly with the source of your loan.
Savings: As the loan originator, a bank may save you money in the loan process and/or offer you better terms based on your total assets on deposit with the bank.
Speed: A bank also may process your loan faster than other providers.
Risks of a mortgage bank: 
Limited choice: Mortgage bankers only offer their own programs. To comparison shop, you will need to speak with several lenders.

Mortgage brokers 

A mortgage broker is a middleman who may represent the mortgage loan products of hundreds of different lenders. The broker's goal is to match you with the loan product that best meets your needs at the best price. Once your loan is approved, you will usually deal directly with the loan originator or their mortgage service provider.
 Benefits of a mortgage broker: 
Variety: By shopping across a range of different programs and lenders, a mortgage broker may find you a better fit than a mortgage bank.
Qualifying: A mortgage broker can best steer you to the national or regional lenders that are most likely to accept your application based on your financial and personal information.
Savings: You may get a more favorable loan rate.
Speed: A broker saves you time shopping for a loan.
Risks of a mortgage broker: 
Hidden costs: Some mortgage brokers attempt to increase their profit by writing hidden costs into your loan.
Best hedge: know the loan process and ask questions.
Professional oversight: Unlike mortgage bankers, mortgage brokers are not subject to licensing and regulation in all states.

Your Local Bank or Credit Union

Most financial institutions offer a limited menu of loan products, just as mortgage banks do. They typically hold mortgages in their portfolios or sell them on the secondary market.

Home builders and real estate agencies 

Many large home builders and real estate agencies now own an in-house mortgage company to make it easier to buy their properties. These affiliated companies may operate as a mortgage banker or broker.

 Internet lenders 

Mortgage lenders have proliferated on the Internet in recent years, offering fast, easy loans at competitive rates. Some are online channels of brick-and-mortar financial institutions or mortgage brokers, others are Internet-based banks or brokers. Which lender is right for you? Depending on your credit history and circumstances, you may benefit by using one source of mortgage loans over another.

What kind of borrower are you?

Excellent credit, easy access to financial documents, longtime employee of one company.
Best source to shop: Internet lender, bank or mortgage bank.

Self-employed borrower, don't want to share data about income or assets with mortgage provider.
Best source to shop: Mortgage broker.

Repeat home shopper, rate-and-term refinance customer, financially savvy.
Best source to shop: Internet lender.

ARM shopper, relationship customer with many accounts at one institution.
Best source to shop: Bank, thrift.

Convenience shopper, wants easiest loan to get even if it costs more.
Best source to shop: Home builder or real estate agency lender.

Need more mortgage information?  Send me a message today or call me for answers.
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