The ins and outs of lenders
By Keith Woeste
So you have decided to take advantage of the down market and buy
a home or you need to refinance. But you do not know who to get
your mortgage through. Should I go to a Mortgage broker or just go
to the bank? What is the difference?
The ins and outs of lenders
By Keith Woeste
So you have decided to take advantage of the down market and buy a home or you need to refinance. But you do not know who to get your mortgage through. Should I go to a Mortgage broker or just go to the bank? What is the difference?
A mortgage banker is a direct lender. They work for a bank or lending institution that lends their own money. They will often sell these loans on the secondary mortgage market or may choose to service them.
A mortgage broker is a middleman. He will gather the loan information and client documentation, analysis it and search for the best lender for the loan. A broker may have multiple lenders that he can work with to find the best possible lender for each client. A broker gets wholesale interest rates and charges a fee for these rates.
When working with a banker you may save money on fees charged by a broker. You may find the process easier by getting faster loan approval and see an overall easier loan process because they are a direct lender.
But the mortgage bankers have their limitations. They are limited to the loan programs offered by their bank. They are limited on the interest rate they can offer. And the most important is, if you are declined by the bank, you will have to reapply and start the process over again with another lender.
Although a mortgage broker will have some fees, such as an administration fee and a processing fee, they have access to a larger variety of loan programs and lenders. They would also have knowledge of how to package and present your loan to various leaders for approval. If your loan is declined by one lender, it can easily and quickly be presented to another lender. With a wider variety of lenders a broker may be able to find better rates and terms for the borrower. In California mortgage brokers are licensed by the Department of Real Estate.
My advice is to weigh your options and decided which is the best path for you. If you have a personal banker, that you have been with and trust, discuss your options with them. If you need the options of multiple lenders, then a broker might be you best option.
