Just Ask Matt: Tips for Choosing a Mortgage Lender
Choosing the right mortgage lender, like choosing the right real estate agent, is an important decision when it comes to the biggest financial investment you might ever make—buying a home.
3 Types of Mortgage LendersBasically, there are three types of mortgage lenders: retail banks, mortgage banks, mortgage brokers, and credit unions.
Choosing the lender that is right for you will save you time, stress, and cash. Your loan officer, the one that represents the lender, but works with you and your real estate agent, is a powerful ally. So choosing a mortgage lender and partnering with the right loan officer is equally important.
What is a Retail Bank Mortgage?Retail banks are local banks, or national ones such as Chase, Wells Fargo, Bank of America. Sometimes, because they do their own underwriting, they may be able to offer lower fees and looser credit requirements. A loan officer will be assigned to you and will receive either a bonus or commission for writing your loan. But if you like to have all your accounts in one place, you may want to check with your banking institution or credit union first. A con with many of these national lenders is they don't have the best deals when you dig into the fine print.
What is a Credit Union MortgageCredit Unions are not-for-profit and customer-owned and are not beholden to shareholders like a retail bank. Credit Unions are typically able to offer more personal service and lower fees. For a loan at a credit union, you must be a member of that credit union. Like with a retail bank, you will be assigned a loan officer and they will receive a bonus or commission for writing your loan and working with you.
What is a Mortgage BankMortgage banks only offer home loans, such as PennyMac, and AimLoan. Quicken Loans has Rocket Mortgage with operates like a mortgage bank. Again, you are assigned a loan officer who receives a bonus or commission. These are generally online lenders so you will not receive the personal touch that you would if you were dealing with a local lender.
What is a Mortgage BrokerMortgage brokers navigate the complicated marketplace and find the highest quality home loan that fits an individual's unique situation and needs. They are a liaison between mortgage lenders and home buyers. They tend to do the heavy lifting and leverage their relationships in the financial industry to get the best rates and mortgage terms. They are, essentially, like your own personal mortgage shopper. Using a mortgage broker who is in your local area, is an added bonus. You will either be working directly with an individual agent or a group. You are generally charged 1-2% of the loan amount, which is paid at closing and is worked into the loan.
Types of Mortgages by HARTV
Houston Association of REALTORS®
Before You Choose your Mortgage LenderPurchasing a home is one of the biggest financial investments you may ever make. When choosing a mortgage lender, there are subtle differences that could add up to tens of thousands over the course of your loan depending on your mortgage type. You need to thoroughly research your options as that is future money you need to consider.
If you're working with a real estate agent, they are a valuable resource and can help you narrow your choices or arm you with the right questions to ask. That's another benefit of working with a REALTOR®, they've had plenty of experience with lenders—good, bad, and ugly.
Loan Pre-Approval or Pre-QualificationMany home buyers shy away from pre-approval or pre-qualification because they're afraid it's going to mess up their credit score if it gets pinged too many times. First off, a pre-qualification is not going to affect your credit score. So that's good, but it also only gives you a snapshot of your creditworthiness and is an approximation when you have no clue as to what your credit score is anyway.
When you are pre-approved, it means you have skin in the game. You are ready to play to win. You know what you have, what you can get. You're the boss. Getting pre-approved is a grown-up thing to do when you are serious about buying a home. In most scenarios, you have to be pre-approved before making any type of offer. And, many real estate agents require their buyers to be pre-approved before the house hunt even begins. It really helps to manage expectations in the house hunt. Also, in this market, you don't want to waste any time by making an offer, then having to delay it by waiting on a pre-approval, only to A) be denied or B) lose out due to another offer that is already pre-approved.
So to sum it up short and sweet:
Searching for a mortgage lender? Have questions on pre-approval? Don't know who to go to? Just Ask Matt and his team of real estate professionals, we'll be happy to walk with you every step of the way through the mortgage lending journey. When you choose the Matthew Guzman Team, you get our years of experience with local mortgage lenders and brokers to be sure you are getting the service that fits your needs. Just Ask Matt.