Who Can Help You Get A Great Mortgage Deal?
posted in Mortgage News
When making what is likely to be the biggest purchase of your life, you want to be sure you get the very best deal possible, but how can you guarantee this? With so many banks, lenders and brokers all waiting eagerly to take your loan application, what can you do to ensure you get a great mortgage deal?
Below are some of the key players in the mortgage application process, along with guidance on how to choose the right one for you:
Lenders
Banks, credit unions, online entities and other organizations that provide mortgages directly to consumers, are what is known as direct lenders. While going straight to a direct lender could get you a great deal, without shopping around, how can you be sure?
While direct lenders offer their own loans and deal with the majority of the mortgage process in-house, giving you the opportunity to inquire about rates, terms and fees, you’ll still need to spend time shopping around to see which direct lender will give you the best deal for your circumstances.
Be aware, however, that rates and terms can vary hugely between lenders, and while you may qualify for two loans of the same size, the rates and terms could vary, leaving you with a more costly or complicated loan if you don’t go through the small print with a fine-toothed comb.
Mortgage brokers
If you don’t have the time, energy or ability to shop around for the best mortgage deal, why not have someone else do it for you? Professional mortgage brokers are independent and fully licensed, and perfectly qualified to help find you the very best mortgage deal for your specific circumstances and financial situation. While they charge a small percentage of the loan amount for their service, the amount they can save you over the duration of your mortgage, is usually well worth the investment. With access to deals that you might not otherwise be aware of, they can help get you the very deal on a mortgage, and can guide you through the entire application process.
Correspondent lenders
This type of lender originates and funds their own loans, before quickly selling them on to other, larger institutions on the secondary mortgage market once the loan closes.
Wholesale lenders
Never interacting with borrowers, wholesale lenders are not like direct lenders, and typically work with mortgage brokers to offer loans at discounted rates.
Portfolio lenders
Originating and funding loans from their client’s bank deposits, portfolio lenders hold onto the loans and don’t resell them after closing. This type of lender typically includes community banks, credit unions, and savings and loans institutions.
Hard money lenders
These private investors - who can be either an individual or a group - provide loans on a short-term basis that are secured by real estate. More concerned with the value of the property to help protect their investment, hard money lenders don’t scrutinize an individual’s ability to repay a mortgage in the same way that traditional lenders do. Repayment is usually expected within a short timeframe of between one and five years, and their loan origination fees, interest rates and closing costs can be as much as 10% higher than those of conventional lenders.
While there will almost certainly be a great mortgage deal out there for you, working with a mortgage broker is the quickest and most effective way of finding it, fast.