Selecting The Right Mortgage Lender
For those who are planning on purchasing a home or are thinking of refinancing, they need to choose a mortgage lender. Not all mortgage lenders will fit your credit and financial profile and not all mortgage lenders are created equal. Just because you get denied a mortgage loan from one particular mortgage lender does not mean that you do not qualify for a mortgage loan.
Home Loan With Bad Credit
If you are a mortgage loan borrower with credit scores in the 800’s and great income, assets, and low debt and liabilities, the chances are you can get approved anywhere. However, this is not always the case and many mortgage loan borrowers can have prior bad credit, prior bankruptcies and/or foreclosures, open collections, and high debt to income ratios. There is a mortgage lender that will approve any hard working mortgage loan borrower as long as they meet Fannie Mae, Freddie Mac, or FHA mortgage lending guidelines and have had a good credit history for at least one year. There are big differences between banks, credit unions, mortgage bankers, and mortgage brokers.
How Do These Financial Institutions Impact My Ability To Attain Financing?
BANKS AS YOUR MORTGAGE LENDER
Banks offer residential mortgage loans as well as other financial services. Banks make their money on financial services such as automobile loans, personal loans, lines of credit, and mortgages from the time deposits they get from their customers. Majority of the banks have extremely conservative mortgage lending guidelines and many overlays beyond those mandated by FHA, VA, USDA, FANNIE MAE, and FREDDIE MAC. For example, the minimum credit score a mortgage loan borrower needs to qualify for a 3.5% down payment mortgage loan is 580 FICO. However, most bankers have their own mortgage lender overlays where they will not accept any mortgage loan borrowers with a minimum of a 640 FICO scores. Mortgage rates from banks are higher than those offered by mortgage bankers, and mortgage brokers due to their high overhead. Banks do not have to disclose yield spread premium ( the profit the mortgage lender makes to originate a loan ) due to their exempt status from the government. Most banks take a longer time to process and underwrite a mortgage loan compared to mortgage bankers and mortgage brokers. If you need a two week closing done, a bank may not be your best choice.
MORTGAGE BANKER AS YOUR MORTGAGE LENDER
Mortgage bankers are in the business of originating and closing residential mortgage loans and reselling them to Fannie Mae and/or Freddie Mac. Mortgage bankers use their own wholesale mortgage line of credit and once they fund a loan, they package them up and resell them to the secondary market to relieve their wholesale warehouse line of credit so they can repeat the process. Not all mortgage bankers are created equally. Each mortgage banker has their own internal mortgage lender overlays and may have overlays beyond the minimum guidelines set by FHA, FANNIE MAE, FREDDIE MAC, VA, or USDA. If you get denied for a residential mortgage loan from one mortgage banker, you can apply to a different mortgage banker. Every mortgage banker has their own mortgage lending guidelines so if one mortgage banker does not like your credit and financial profile, that does not mean another mortgage banker will. Like banks, each mortgage banker might have their minimum credit score requirements and debt to income caps. For example, some mortgage banker might not accept any borrowers with a credit score lower than 640 FICO. Other mortgage bankers may take on a borrower with a minimum credit score of 620 FICO.
MORTGAGE BROKER AS YOUR MORTGAGE LENDER
Mortgage brokers are licensed mortgage professionals who represent wholesale mortgage lenders. Mortgage brokers normally have over dozens of wholesale mortgage lenders with various different mortgage lending guidelines. Hiring mortgage brokers will be ideal for a mortgage loan borrower with prior credit problems or high debt to income ratios. Mortgage brokers can represent wholesale mortgage lenders who have no mortgage lender overlays and as long as you get an automated approval, they can probably get your mortgage loan done. If you are a rate shopper, you can hire a mortgage broker and he or she can shop for the best rates in the country. There are mortgage bankers who are also mortgage brokers. These mortgage bankers will broker a mortgage loan that they cannot do due to their own mortgage lender overlays.
Mortgage After Bankruptcy And Foreclosure
If you are a mortgage loan borrower who have had a prior bankruptcy, foreclosure, deed in lieu of foreclosure, short sale, late payments, open collections, or recent late payments, a mortgage broker is probably your best choice since they have a variety of wholesale mortgage lenders that might fit your credit and financial profile. If you are a mortgage loan borrower in Illinois, Florida, Wisconsin, California, or Indiana and have gotten denied a mortgage loan from a banker or mortgage banker, please contact me at 262-716-8151 or visit me at www.gustancho.com . Over half of my business are from borrowers who could not qualify at banks or mortgage bankers due to their mortgage lender overlays. I have many bankers and mortgage bankers who refer me business where they cannot do the mortgage loan.