Various Types Of Mortgage Lenders; Who Should I Pick To Be My Mortgage Lender?
Mortgage loan borrowers have a wide variety of institutions to choose in applying for a residential mortgage loan. They can go to their local bank, a national bank like Chase, Wells Fargo, Bank of America, Citibank, or any regional bank. They can also choose their local credit union or the hundreds of mortgage bankers or mortgage brokers locally or nationally. Mortgage loan borrowers now can apply for a residential mortgage loan in the comfort of their own home via online mortgage applications instead of visiting their mortgage lender face to face like they needed to do. Everything in mortgage lending, from the initial application, to submitting documents is all electronic now and done via email and/or fax.
Choosing Retail Banks Versus Mortgage Bankers
Certain mortgage lenders are direct mortgage loan lenders such as retail banks and have retail brick and mortar locations. Many banks mortgage rates are higher than mortgage bankers and/or mortgage brokers due their higher overhead such as advertising and having retail salaried staff in their residential mortgage lending division. Banks rely on advertising and name recognition. Banks do not have to disclose on how much they make in yield spread premium like mortgage brokers do. They are exempt in disclosing many fees. Mortgage brokers do not have that luxury and need to disclose their yield spread premium as well as other fees unlike banks and mortgage bankers.
Mortgage bankers are in the business of having warehouse lines of credits and originating residential mortgage loans and reselling the mortgage loans after they originate to the secondary market so can pay off the warehouse line of credit and keep on originating mortgage loans again. Its like a car dealership having a floor plan where the dealer can purchase cars to supply their inventory and once the cars get sold to customers, they pay down their floor plan and the process restarts. Mortgage bankers can have their own overlays and decide which type of borrower base to lend to. Mortgage bankers do not have to disclose yield spread premiums and are exempt from disclosing many fees and charges like banks and credit unions. Unlike banks, mortgage bankers do not have as much brick and mortgage offices and do not do mass advertising like banks do so they have lower overheads. A mortgage loan borrower will definitely get lower mortgage rates and terms than most banks.
For those mortgage loan borrowers who are members of credit unions and have their checking, savings, and credit accounts there, they might want to see if the credit union can qualify them for a residential mortgage loan and see if they will give them favorable rates and terms due to being a member. For mortgage loan borrowers who have great credit and are members of a credit union, they might get the best rates and lower fees from them since most credit unions take care of their members. Credit unions, like banks and mortgage bankers are exempt from disclosing yield spread premiums and other fees and charges unlike mortgage brokers.
If you have less than perfect credit, had a prior bankruptcy, foreclosure, deed in lieu of foreclosure, short sale, late payment history, lower credit scores, higher debt to income ratios, short time on the job, or have been rejected by a bank, mortgage banker, or credit union, choosing a mortgage broker may be your only option in getting a residential mortgage loan. Mortgage brokers work for a commission called yield spread premium and are licensed and extremely regulated and represent wholesale mortgage lenders. The advantage of mortgage brokers is if one wholesale lender denies a mortgage loan for the mortgage loan borrower, the mortgage broker can take it to a different wholesale mortgage lender. Mortgage brokers normally can offer better mortgage rates than bankers, mortgage bankers, and credit unions due to the fact that they represent wholesale mortgage lenders and can offer wholesale mortgage rates versus retail rates. The mortgage lender compensates the mortgage broker via yield spread premium and the mortgage broker needs to disclose the YSP unlike banks, mortgage banks, and credit unions. Mortgage brokers have wholesale relationships with dozens of mortgage bankers and are extremely regulated, more so than any bankers, and credit unions.
Difference Between Bankers, Mortgage Bankers, Credit Unions Versus Mortgage Brokers
Bankers, credit unions, and mortgage bankers are direct lenders are captive only to their own products and have their own overlays when offering a residential mortgage loans. These direct mortgage lenders do not provide unbiased recommendation or selection of other mortgage products nor other mortgage lenders in the event if the mortgage loan borrower does not qualify for their own products. If you do not qualify for their own mortgage loan products and their internal qualification, the mortgage loan borrower is out of luck and left on their own to find another bank or mortgage banker.
Mortgage Brokers Versus Mortgage Bankers
On the flipside, mortgage brokers represent dozens of wholesale mortgage lenders who various different qualifying criterias and mortgage lending overlays and can be objective and select the appropriate wholesale mortgage lender that suits the mortgage loan borrowers credit and financial criteria. The yield spread premium they receive from the wholesale mortgage lenders is extremely regulated and mortgage brokers do not get paid until the mortgage loan closes so they will act on your best interest to get the mortgage loan closed.
Benefits Of Mortgage Brokers Versus Bankers
For example, if you decide to walk in your local bank where you have a banking relationship with and apply for a mortgage loan and you get denied, the bank can no longer help you. However, with a mortgage broker, in the event if you get denied for a mortgage loan from a particular mortgage banker, your mortgage broker has all of your files and can resubmit it to another wholesale mortgage lender and might have you sign you certain disclosures of the new mortgage banker and not start the whole mortgage application again.
Home Loan With Bad Credit
If you have challenged credit such as prior bankruptcy, foreclosure, deed in lieu of foreclosure, short sale, late payments after bankruptcy or foreclosure, credit scores under 640 FICO, short term on the job, or high debt to income ratios, a mortgage broker or mortgage banker with no lender overlays might be your best choice. If you got denied from a bank, credit union, or mortgage banker but you got an Automated Underwriting System approval per DU Findings please contact me at 262-716-8151 or visit me at www.gustancho.com . I can get your mortgage loan approved. All I need is an approve eligible per DU Findings. I represent wholesale mortgage lenders with no overlays. You AUS automated approval is your mortgage approval. I can also help you after a one year waiting period after a bankruptcy, foreclosure, deed in lieu of foreclosure, or short sale qualify for a residential mortgage loan via HUD’s new FHA Back to Work Extenuating Circumstances due to an economic event.