Choosing Your Lender for Your Mortgage Loan
Until the massive array of foreclosures came upon us most homeowners never knew the difference between a mortgage company or mortgage banker or who their home loan was even serviced by. Why wait until trouble brews?
Many consumers assume that “mortgage companies” are banks that lend their own money. In fact, a company that you deal with may be either a mortgage banker or a mortgage broker.
A mortgage banker is a direct lender; it lends you its own money, although it often sells the loan to the secondary market. Mortgage bankers (also known as “direct lenders”) sometimes retain servicing rights as well.
A mortgage broker is a middleman; he does the loan shopping and analysis for the borrower and puts the lender and borrower together. And many of the lenders through which the broker finds loans do not deal directly with the public.
Using a mortgage banker can save the fees of a middleman and can make the loan process easier. A mortgage banker can give you direct loan approval, whereas a broker gives you information second-hand. However, many mortgage banks are limited in what they can offer, which is essentially their own product. In addition, if you present your loan application in a poor light, you’ve already made a bad impression. This is not to suggest that you lie or mislead a lender, but understand that presenting a loan to a lender is like presenting your taxes to the IRS; there are many ways to do it, all of which are valid and legal. Using a mortgage broker allows you to present a loan application to a different lender in a different light (and you are a “fresh” face).
A mortgage broker charges a fee for his service, but has access to a wide variety of loan programs. He also may have knowledge of how to present your loan application to different lenders for approval. Some mortgage bankers also broker loans.
Choosing a Lender
Choosing a lender that you want to work with involves several factors, not the least of which is an open mind. You need a lender that can get the job done on a deadline. A company that is large enough to have pull, but small enough to give you personal attention. And, most of all, you need a lender that can deliver what it promises. We’re not talking about creative financing or flat out lies to qualify for a loan but a lender who goes the extra mile to make it happen.
It is important that the lender you are dealing with has a number of different programs and is knowledgeable about guidelines and qualifications. It is often the case that you find out a particular loan program won’t work, in which case you need to switch gears (or loan programs) in a heartbeat to meet a funding deadline.
Your real estate agent and lender can guide you to an array of programs but educating yourself in order to choose wisely can save you headaches in the end.
