The post Great Recession mortgage industry is a very different than it was seven or eight years ago. Increased lending restrictions and licensing regulations have for the most part, eliminated the chop shop mortgage broker from the equation. And although the mortgage industry is a safer place for the consumer, it doesn't mean that finding the right mortgage professional for your needs is any easier. You will never feel so important as you do when you go to apply for a mortgage, and trying to figure out who is telling the truth and who the best liar is can be an arduous task. The following Mortgage Buddy update will provide you with the knowledge you need to make an educated decision about the best mortgage professional for your specific needs.
There are three options to evaluate when looking to obtain financing for the purchase of a new home or for the refinance of an existing mortgage. Those options are a mortgage lender, a mortgage broker, and a bank. All three of them have their strengths and weaknesses in today's market place, but sorting through fact and fiction isn't always that easy. These options are either retail or wholesale lending windows. As a rule you will normally get a better deal when you choose wholesale over retail, but with that can come so other issues as well.
Mortgage Lender:
A mortgage lender can vary in size and structure. A lender will usually fund the loan and then sell the loan to Fannie Mae or Freddie Mac or to a large bank. A lender can be great to work because they usually have several banks that they do business with which means more options for you the client. Many times the lender will have have in house loan processing and underwriting which will speed up the transaction time.
Bank:
Many people like the feel of their local bank or the bank they have their checking and saving accounts with. They enjoy the comfort they get from going into a bank setting and sitting down to review paperwork. A local bank can sometimes lend to clients that can't get financing at a lender because they don't have to fit into the Fannie Mae guidelines. For the most part though, a bank will have less lending capabilities than a mortgage lender or broker because they are only lending on one set up underwriting guidelines, whereas a the other two can deal with multiple banks. More options is a big plus in this challenging market, but if you like the atmosphere of bank than this option might be best suited for you.
Mortgage Broker:
A mortgage broker originates loans and utilizes a multitude of approved lenders or banks that they are signed up with. A mortgage broker usually has the lowest rates because there is less overhead and more "wholesale" options. The downfall to a broker is that there can be more paperwork involved and the underwriting turn times may be a bit longer, but you have to weigh out for yourself whether the increased paperwork and time are worth a little lower interest rate.
For many potential borrowers, the best option is some combination of the three. That way you are increasing your odds of getting a competitive rate, speedy underwriting turn times, and the best mortgage program flexibility. No matter which avenue you choose make sure that your mortgage professional is responsive and thorough. He or she should be available in the evening or on the weekends to address any questions or concerns that could come up during the transaction. And finally, ask lots of questions. Never hold back a question on something you are unsure of. This will probably be the largest investment of your life and it needs to be handled that way.
