To get the mortgage that fits you best,in today’s world of mortgage lending there are really three sources.
Most people today prefer working with banks because they provide the financing directly and they usually have control over the transaction. The three funding outlets are as follows:
1. A bank-a depository institution such as a chase or wells or even your local bank or credit union fall into this category. These folks are typically not paid the way a mortgage broker or a mortgage banker is (ie % of the loan amount) but rather they are paid on salary or on an hourly basis and they make a very small percent of the loan when it funds. A lot of the time because of their pay structure they do not have a vested interest in making sure your loan closes on time. They usually work and 8-5 schedule and are unavailable on the weekend. These people also do not have to be licensed with the national mortgage licensing service. They have to be registered as loan originators however they do not have to be tested, fingerprinted or background checked. Because of this you are most likely going to be dealing with a basic loan officer who is very transactional oriented.
Another source to get a quality mortgage is a mortgage broker.
2. A Mortgage Broker-this group of people do have to be licensed with NMLS as licensed mortgage loan originators. These folks used to be the go to people in the mortgage financing in the hey-day a few years back. There been several reports over the years that the loans that came from the wholesale channel i.e. from brokers did not perform as well as loans from financial institutions. A mortgage broker is compensated anywhere from 1 to 3% of your loan amount and are typically paid on a 100% commission loan structure. These people take your home loan application and they place your loan with a lender. There are a few fundamentals that you should be aware of every time a mortgage broker places a loan with a lender that lender in turn pulls a copy of your credit report. So you receive a credit pull from the mortgage broker and potentially two to three more credit pulls depending on how many banks the broker places your loan with. This will indirectly drop your credit score and can cause an issue for you to get preapproved to be able to a obtain mortgage. The other thing about mortgage brokers is that because they are the middlemen they charge fees and then the lender that they are placing loan when also charges fees and as a result you pay both people. Mortgage brokers do not fund their own loans. They arrange financing with lenders to accept loans on the wholesale channel. Mortgage brokers also do not typically have pull with underwriting and as a result they have less control over your loan which is something that you need to be aware of especially if you are purchasing a home. The mortgage broker as we know it is another funding channel, but from my experience it ends there. Mortgage Brokers have no obligation in making sure you make your payments on time or that your loan is sold properly after it is funded.
The last and final source to get a quality mortgage, is the mortgage banker.
3. A Direct Lender/ Mortgage Banker- these people do have to be licensed with the NMLS as licensed mortgage loan originators. The main difference between a banker versus a broker is the fact that a banker represents and warrants in the origination of the loan in making sure you has the ability to afford the loan both before and after the loan closes. This is because a mortgage banker is taking considerable risk lending their own money to and as a result they need to make sure that the people they are lending to can actually afford the house and that they are being responsible. A typical mortgage banker has a monthly credit line somewhere in the hundreds of millions which they use to fund loans with on a monthly basis.
After they fund the loan they sell the loan usually to Fannie Mae or Freddie Mac in the secondary market and then they free up their credit line again to originate more loans. They are also directly compensated on the performance of the loans that they originate as well. Mortgage bankers also have direct contact with underwriting and have significant pull in getting a loan to perform or meeting the contract deadlines of a real estate purchase contract. These are the folks that can make loans happen in record time as well as deal directly with underwriters. Mortgage bankers also are regulated by the Federal Reserve and have a higher level of standard in giving folks better financing than a broker does. Bankers lend their own money and they can actually make decisions on loans that brokers can’t because it’s their own money. A Local Petaluma Lender will help you secure the lowest mortgage rates.
Make no mistake there tons of choices out there in terms of which company to go with. A mortgage banker has the flexibility of a broker yet the financial backing of depository institution which makes them a quality hybrid choice in today’s complex lending environment.
Call Scott Sheldon Mortgage Banker at (707) 217-4000 to get your custom mortgage rates now!
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