Which Type Of Lender Is Right For You?

There was a time when almost all home buyers obtained their mortgage loans through their banks or credit unions.  Today, however, there are a number of additional home financing providers.  Which type of lender is right for you?  Let's take a closer look at 3 options!

Traditional Banks

A bank, or typically your local home town bank, is a direct retail lender.  In other words, the bank's employees alone review your application and make the decision to lend you money.  In almost all cases the bank will sell your loan on the secondary market.

Benefits of your local home town banker:

• Reliability:  You probably know and trust your local banker.  It is regulated by state and federal agencies and likely has strong ties with your community.
• One-stop shopping:  You deal directly with the source of your loan.
• Savings:  As the loan originator, the bank may save you money in the loan process due to your total assets on deposit with the bank.

Risks of your local home town banker:

• Limited choice: bankers generally only offer their own programs.  To comparison shop, you will need to speak to several lenders.  This can cost you valuable time and money especially when interest rates are rising.
• Interest rates:  Due to very strict lending guidelines, credit score requirements, and limited loan programs bankers may not offer the most favorable interest rates.

Traditional Mortgage Brokers

A mortgage broker is a wholesale lender who may represent the mortgage loan programs of hundreds of different wholesale lenders.  The broker's goal is to match you up with the loan program that best meets your needs at the best price available in the market.

Benefits of a mortgage broker:

• Variety:  By shopping across a range of different programs and lenders, a mortgage broker may find a better fit for your needs than your local banker.
• Qualifying:  A mortgage broker can best steer you to the national or regional lenders that are most likely to accept your application based on your financial and personal information.
• Savings:  You may get a more favorable loan rate.
• Speed:  A broker saves you time shopping for a loan.

Risks of a mortgage broker:

• Hidden costs:  Some mortgage brokers may attempt to increase their profit by writing hidden costs into your loan.  The best hedge against this is to ask lots of questions.

Non-Traditional Upfront Mortgage Brokers®

Like traditional mortgage brokers, Upfront mortgage brokers offer the same benefits without the possibility of hidden costs.  Upfront mortgage brokers abide by the Upfront Mortgage Brokers® Commitment.  This commitment assures that the broker will endeavor to act in the best interest of the borrower.  Upfront Mortgage Brokers® give their borrowers pricing upfront that will not change at closing!