Mortgage lenders are not all the same. Where you borrow your money should be dependent upon who has the best mortgage products for your particular situation. Where should you look for a mortgage? What should you ask a mortgage lender?
There are four types of mortgage lenders:
- Banks and Mortgage Bankers – Many people’s first choice for a home loan is the bank where they have their accounts. Banks may offer lower rates but they tend to be more conservative in their lending practices and may not offer the full spectrum of government-backed loans.
- Credit Unions – Like banks, Credit Unions are a good place to start if you are a member or can easily join one. Rates are usually similar or even lower than bank rates. But like banks, lending guidelines may be more conservative and they may not offer all of the government loan programs.
- Mortgage Lenders – Unlike banks, mortgage lenders exist for the sole purpose of making loans against real estate. They sell the loans to banks or servicing companies after making them. Because they do all of the loan origination in-house, mortgage lenders can often process loans faster than banks or credit unions.
- Mortgage Brokers – These are middlemen between you and a bank or mortgage lender. They can shop the best place for you to borrow money for a home—and it’s not always they typical lender. Brokers are good options if your credit is not so good or you have other circumstances that make getting approved for a loan from a bank or mortgage lender difficult.
Before you complete a loan application with a lender, make sure you understand what you can expect from them and what’s expected of you. Florida Realtor Magazine offers a list of questions you should ask a mortgage lender before committing to an application:
What to Ask when Choosing a Lender:
- What are the most popular mortgages you offer? Why are they so popular?
- What fees are included in a loan; and what fees will be due at closing?
- Are your rates, terms, fees and closing costs negotiable?
- Do you offer discounts for inspections, homeownership classes or setting up automatic payments?
- Will I have to buy private mortgage insurance? If so, how much will it cost and how long will it be required?
- What are your escrow requirements?
- What bill-pay options do you offer?
- What would be included in my mortgage payment (homeowners insurance, property taxes, etc.)?
- Which type of mortgage plan would you recommend for my situation?
- Who will service this loan, your bank or another company?
- How long will the rate on this loan be locked in? Will I be able to obtain a lower rate if the rates go down during the lock-in period?
- How long will the loan approval process take?
- How long will it take to close the loan?
- Are there any charges or penalties for prepaying this loan?
- How much in total will I be paying over the life of this loan?
Remember, your Realtor® is a great resource. They know the local lenders and can make recommendations for you.Return to the Blog