Having a great lender on your side makes you entire experience so much easier. Your most important people in your real estate transaction are your agent and your loan broker. Make sure that both of them are AWESOME!
If I came to the realization today that it was time for me to buy a home, the first thing I would do is find a lender I could trust. Any time I talk with new clients or referrals, one of the first couple of questions I ask is whether they have been prequalified or preapproved by a lender.
There’s a difference between prequalification and preapproval. These terms get thrown around a lot, and they are not the same. Between the two, preapproval is better. Prequalification is like telling a loan officer about your financial situation over the phone to see whether things jive with what you are trying to accomplish. Preapproval is a full-blown credit check with verification of your assets and income. Because people always embellish their personal situation, a prequalification may not be accurate or offer much insight. It’s like asking a lender, “If I make about this much, and I have this credit score, and I am looking to get a loan for so many dollars, do you think I can get the loan?” This is kind of ridiculous: there’s no reason for the lender not to say “Of course!” just to get you in the office! For these reasons and more, preapproval is the way to go; the numbers never lie when they look at your financials and check your credit, and when you are preapproved by a trustworthy lender, you can be confident that you will be able to get a loan.
The best lenders are the ones that you are referred to. TV commercials and lenders you find on the web are NOT COOL! These are shady lenders that may sell your information to other sources, please visit:- https://whiteoutpedia.com/ https://titanmedicalstock.com/ CoGlassware.com justpersonalcare.com or “get” you with a teaser rate that’s only available for perfect borrowers with spotless credit, who make way more money than you. On the other hand, your brother’s friend’s uncle that does loans part-time from his home office doesn’t fit the optimal description of a good loan officer either! It all comes down to who you know, or who you can get connected with.
When looking for a good loan officer, there are a couple sources to consider. You could ask your Realtor for referrals. In fact, a professional agent that works with lenders every day is the BEST person to ask for a referral to a lender. We Realtors know which lenders do their job the best, and which to avoid. If one of your friends or family members just closed a transaction and had a positive experience with a lender or loan officer, this would also be a terrific place to start.
Banks vs. Brokers
There are two very different kinds of loan officers: mortgage bankers and mortgage brokers. Put simply, a mortgage banker works at a bank that offers loans, while a mortgage broker finds a loan from one of several banks. There are benefits to each, and neither way is clearly better than the other: it all comes down to personal preference.
To go with a mortgage banker, walk into the bank and say to the banker, “Hey Mr. Banker, I would like to apply for a home loan!” The banker will sit you down, and offer whatever loans that particular bank is offering at that particular time. The Banker might say, “Do you want Loan A, Loan B or Loan C?” By contrast, a brokerage has dozens and dozens of relationships with banks, putting a lot of options at its disposal. After all, every borrower is different, and every bank offers different guidelines for lending. If you are self-employed, certain banks might not offer you a good loan. Similarly, maybe you are a teacher or government worker or in the military; some mortgage brokers specialize in these professions and would do a much better job than a typical big bank loan. A good mortgage broker will be able to find a solution (a good loan that fits) for most borrower types.
Other issues that would cause a borrower to need to look elsewhere than the largest banks are if you have a smaller than average down payment, less than stellar credit, or the need for a larger allowance for closing costs, or if you are financing a condo that has issues with the HOA, among many, many others. The list of things that lenders scrutinize changes weekly. This really emphasizes the point that, no matter whether you use a bank or a broker, the person you actually deal with must KNOW HIS OR HER STUFF INSIDE AND OUT. Research, ask questions, test them, and pick the best person. May the best and most experienced loan person win your business!
Is there a difference in costs between a mortgage bank and mortgage broker? Yes. For the most part, using a mortgage broker tends to be a bit more expensive in terms of the closing costs for your loan. Why? When you go with a brokerage as opposed to a big bank, your loan officer has a greater need to make a good impression and establish a relationship with you. He (or she) wants to do a job deserving of any referrals you may send over after a successful transaction. Your loan officer can be contacted directly, and you will establish a personal rapport and business relationship together. He will hold your hand the entire way throughout the transaction. Contrast this with a bigger bank, where you will still have a loan officer, but where the personal touch can sometimes erode. Of course, there are wonderful loan officers at the larger banks, but you should expect to get a bit more “hand holding” when you work with a broker. This being the case, they typically get compensated more for dealing with you on a more frequent basis.
Sometimes the big banks offer deals and incentives a broker just can’t match. In order to get more loans closed, a big bank can give better deals, perhaps waiving the closing costs or offering rates that are not profitable to a smaller mortgage broker. Be savvy, ask a lot of questions, and do your homework! I love to talk, and I love it when my clients call me with questions about these sorts of offers!
Banks and brokers both have loan officers working for them. Your job is to make sure you get the warm and fuzzy feeling with your loan officer when you meet initially, and at the same time stay clear-headed and focused. Your loan officer can literally make you or break you, so make the right decision as to who will get your business.