All lending institutions are NOT created equal!
When you look across the lending spectrum, there are many differences that many people are not aware of.
#1 - Loan Options
Most people know very little about mortgages and even what it takes to qualify for a specific mortgage, say FHA versus VA, Conforming versus USDA.
Just because the sign says "Mortgages" or "Home Loans" or it's a local or regional Bank that offers mortgages, DO NOT think that that institution is fully capable of offering a full array of mortgage products - because many are not. Many companies are limited with their mortgage products and do not offer FHA, VA, USDA, first-time home buyer programs, 30 year fixed terms or even 100% financing options. So how many clients are missing loan opportunities???
I get phone calls all the time from clients asking, "What is your interest rate today?" What they "should" be asking is what loan programs do you have available that may be more beneficial to me. I have found too many times that LO's (loan officers/ originators) are only "order takers," and not acting like the mortgage professional many say they are. They should be looking at the client's options versus just putting them "in the box." But here's the problem.... When you don't know, then how do you know you're getting the best program? If your mortgage company or bank has limited programs, then you may be missing an opportunity that saves you money through the life of your loan.
Even worse than that is when a company has a loan program but the LO doesn't know much about other programs and doesn't offer it. Talk about a missed opportunity! I've heard of LO's not offering a program because "It's too hard" or "It takes too much time." That is really sad, because who are these LO's really looking out for? I will let you answer that question...
But the difference doesn't stop there.
#2 - Lending Guideline Differences
This is a MAJOR difference!! Just because a company can offer FHA doesn't mean that the lending requirements are the same from institution to institution. Here's a short story:
- About 6 months ago I was working with a client who happened to have $3,000.00 worth of old collections. The client's Realtor called me questioning about the collection, "What are you going to do about these collections? I have been doing this for 12 years and the lenders I work with will require these collections to be paid. And they don't have the money. So what are you going to do about these collections.....etc. etc.'" After taking a DEEP breath, I responded, "Mrs. Realtor, I have only been doing this for 4 years and NO lender that I work with on FHA loans will require these "OLD" collections to be paid. It appears that this may be your lender's requirement. Why pay something when you're not required to, according to FHA? Why put the borrower through that unnecessary stress?" Oh she was really not happy then...
The point here is that each company IS different and just don't think that if THEY require something for a particular loan program that it's the standard across the board.
These same differences apply to many other aspects of the mortgage industry, such as:
- Underwriting and Processing Capability
- Credit Score Requirements
- Credit History Requirements
- Interest Rates
- Mortgage Terms
- Down Payment Requirements
- Property Types
- And the list goes on...
Know your mortgage options!