Finding A Mortgage Lender
The first step towards buying a home is to find a lender that can provide a mortgage loan. It is better to start contacting the mortgage lenders in your area or consult the friends and family members that have already purchased the house. Check the newspaper real estate section, business section, look at yellow pages under the mortgage or find online lenders that can offer a mortgage in your area. If you have a bank account talk to your bank credit department if they can offer mortgage.
Meet Mortgage Loan Officers
Have meetings with as many as mortgage loan officers that you wish and ask them to be pre-qualified. You will need to discuss your income, debts, savings, credit, employment and business if you have. It is to keep in mind when comparing interest rates among lenders that mortgages with the same interest rate can end up costing different amounts because of additional costs such as origination and application fees.
It is important to consider the mortgage interest rate, but make sure that you feel comfortable with the person or institute providing you loan. You will be working close to your lender and by spending some extra time at the beginning you can find that you are comfortable with this or not. Don’t judge your lender only on the criteria of interest rate there may be a bunch of things that may be irritating for you.
After spending some time, if you are unable to get the feeling, it better to ask them that how they approach your needs. If you still feel uncertain, ask for references and talk to them. At this point you are not filling and type of documents with your lender, just you are having a conversation. Ask them to review the types of that are generally available through your lender. Many lenders offer a variety of loans. You should become familiar with the different products so you can find a mortgage that best suits your financial and lifestyle needs.
Types of Lenders
There are a number of institutes that can offer different kinds of loans. Most of the loan are regulated by federal or state agencies and all are required to adhere to federal and state laws governing mortgage banking. Some kinds of mortgage lenders are given here:
Mortgage banks deal with only mortgage lending. Finance for their loan comes from investors in the “secondary market”. Fannie Mae and Freddie Mac are two big investors. These are two “Government-Sponsored Enterprises” that buy loan and sell them to other investors who expect a certain rate of return from the principal and interest payments. The selling home to investors is to make sure that funds are available for funding new mortgage and investing in other real estate properties. Most mortgage banks do not service the loans they originate.
Mortgage banks may be competitive and can offer better feed and rates because they specializes in lending and cannot depend on revenue from or have the need to cover losses in other departments, as is common in traditional banking. They may not have access to other loan types associated with federal banks and federal money. State laws may be different that covers the mortgage banks and traditional banks.
Mortgage broker is a well know type of mortgage originator. They can represent a large variety of lenders including the traditional banks and mortgage banks and specific investors as well. The brokers may be in a better position to offer a bunch of loans, but also are less regulated in some states. It is better to check with your state banking authority if there are any questions.
These are the banks that are referred as “the bank” and where the checking and saving accounts are maintained. These are federally chartered banking institutions that can usually be identified by the words “national” or “national association” in their titles or by the letters N.A. or NT&SA following their titles. National banks represent about 28 percent of all insured commercial banks in the United States and hold 57 percent of the total assets of the banking system.
A credit union is a cooperative financial institution that is owned by its members. Board of directors from its membership design policies and define the interest rate. It is exempted from state and local taxes being a non-profit institution. They can offer lower interest rates and better loan to the borrowers and its members as compared to the national and other commercial banks. However, the loan, interest rate and terms should be compared with other lenders.
These institutions are specialized in holding saving deposits and making loans, a large portion of which are mortgage loans. Previously they were known as “saving and loan associations”. They used savings deposits to fund their loans, but today they have access to the same funding resources as national banks, including the federal government.