The type of lender you choose can make or break the sale of your next home. So, choose your lender wisely.
In this article, I’ll show you how it’s done!
About Mortgage Bankers
Most Mortgage Lenders in the US are Mortgage Bankers. This includes your bank, credit union, and online mortgage lenders such as Quicken.
They could be classified as: Retail Lenders and Direct Lenders.
Retail lenders usually offer more products other than mortgages, such as checking accounts, savings accounts, CD's etc.
Keep in mind that typically the bigger they are, the slower they are. When working with bigger lenders you can run into more bureaucracy and can lack in customer service (corporate bureaucracy, response times, organization, and speed).
Big institutions usually don’t work on nights and weekends and have multiple people touching the account all at once.
Direct lenders are specialized in mortgages and they originate their own mortgages. They are my favorites because they have more flexible underwriting guidelines than the retail lenders.
Just like retail lenders, direct lenders offer only their products, so if you need to shop around you might want to hire a mortgage broker.
About Mortgage Brokers
Mortgage brokers work with different lenders and can help you save time and effort by shopping on your behalf for products for your particular situation.
They get paid about 1% of the loan amount, called the loan origination fee, and it’s part of your closing costs.
If you need a loan with a low down payment requirement or your credit is not great, they can help you look for lenders that offer products tailored for your unique situation. Brokers typically have relationships with hundreds of lenders. Their connections can help you get better interest rates and terms. Because their compensation is tied to a loan closing, they are motivated to stay on top of it and deliver personalized customer service.
About Hard Money Lenders
Hard money lenders are usually your last resort if you can’t qualify with a conventional lender. They are most appealing to investors who fix-and-flip homes.
These lenders are usually private companies or individuals with significant amounts of cash reserve.
Hard money loans must be repaid anywhere from a few months to couple of years. While they are flexible and quick to close, they charge loan origination fees and interest rates as high as 12% to 18% and also require a high down payment.
They use the property as collateral to secure the loan, and if the borrower defaults on the loan, the lender seizes the property. So, if you are not an experienced investor, be cautious.
They are other types of lenders out there such as Portfolio Lenders, Warehouse Lenders, Correspondent Lenders, Secondary Market Lenders…but those are outside of the scope of this article. Let me know if you'd like a deep dive into these additional types of lenders.
HOW I CAN HELP YOU:
I work with lots of amazing lender partners. If you’re thinking about buying a home, start with a good lender who can help you determine your buying power and what programs are available to you.
Call or text me anytime: (678) 462 5854