Bank or Mortgage Company – What’s the Better Choice?
There has been a long-running debate as to whether a borrower should use a bank or a mortgage company to obtain a home purchase loan or refinance. The question of which type of lending institution would provide a better rate, better service or best advice is a common concern for most borrowers. Borrowers are also looking for high integrity and stability in a given lending institution. Some borrowers are even worried that the company lending the money may go out of business – leaving them to deal with the consequences. And of course, everyone wants the best price.
First let’s dispose of the myths:
After your loan has been settled and the check has been cashed, it doesn’t matter if the lending institution goes bust. Someone else will take over the servicing of your loan without any change to the terms of your loan.
There is a concern, however, if the lender were to go out of business prior to your closing. This event could jeopardize fees you’ve paid, the rate you have locked in, the loan approval and the timing of your closing. Fortunately, this rarely happens since most states monitor the solvency of lenders on a regular basis. Another myth is that the monthly payments will be made to the institution that “holds” the mortgage. In the vast majority of loans issued, the mortgage is sold off into a large pool of loans, called “Mortgage Backs,” sold back to the public as securities. The monthly payments on a mortgage are made to a servicing entity that collects the payments and allocates the portions for principal, interest, taxes and insurance. They also maintain the account and act as the borrower liaison. So contrary to popular belief, these service entities have no ownership position in individual mortgages.
Can a bank be better priced? The answer is “sometimes yes” and “sometimes no.” Pricing structures and programs will vary greatly from bank to mortgage broker and from one bank to another as well. Pricing will not be as dependent on the type of institution as it will be on the programs the institution has available. Sometimes a mortgage banker or broker will be better priced than a bank, but in some cases the respective rates may flip-flop within a few weeks time. It is important for consumers to check all sources and not limit themselves.
Do mortgage bankers and brokers have a better product menu and greater expertise than a bank? The answer again is “sometimes.” Specific elements like price, service and competency should be judged on a case-by-case basis, not by the type of institution represented.
The important distinctions are, reputation, resources and accountability. Almost everyone knows a friend, relative, neighbour or co-worker who has recently had a mortgage borrowing experience. This is a great way to gather the names of legitimate mortgage loan salespeople – a.k.a. “originators” – in your area. Another source can be your local realtor or your attorney. Not only will they have multiple experiences with these loan originators, they will also act as a source of accountability for the loan originator. A mortgage loan originator will be very wary of losing a valued referral source, based on negative feedback. That fear stems from the fact that they probably receive other referrals from that particular source. The loan originator knows that most realtors and attorneys can be very influential in their marketplace. Therefore, the originator is going to be accountable for his/her actions. This accountability will help you in the long run. Once you have a list of accountable and reputable loan origination candidates, you can see if the advice, programs and pricing they offer suit your needs. The result should lead to your best overall loan and mortgage experience.
Home Loans Home Purchase Loans Mortgage Loans
Article Directory: Article Dashboard http://www.articledashboard.com
More Mortgage Stuff:
There has been a long-running debate as to whether a borrower should use a bank or a mortgage company to obtain a home purchase loan or refinance. The question of which type of lending institution would provide a better rate, better service or best advice is a common concern for most borrowers. Borrowers are also looking for high integrity and stability in a given lending institution. Some borrowe…
The new Stimulus Package Obama’s administration has put forth is a new initiative aimed at assisting struggling homeowners at risk of foreclosure or bankruptcy. Chase bank and others are involved with providing their customers with options from the government plan. In addition, they offer a jumbo, adjustable rate (ARM), interest only, or a fixed rate, among other measures to help homeowners keep t…
The new Stimulus Package Obama’s administration has put forth is a new initiative aimed at assisting struggling homeowners at risk of foreclosure or bankruptcy. Chase bank and others are involved with providing their customers with options from the government plan. In addition, they offer a jumbo, adjustable rate (ARM), interest only, or a fixed rate, among other measures to help homeowners keep t…
Most borrowers have heard of FHA home loans. They are very common. You hear about them mostly as loans for first time borrowers, which is common. However, most people don’t realize that FHA loans can also be does for refinancing. They are not only for purchasing a house. HUD owns and operates FHA, which is a program designed to help borrowers who might have difficulty buying a house. If the borrow…
Most borrowers have heard of FHA home loans. They are very common. You hear about them mostly as loans for first time borrowers, which is common. However, most people don’t realize that FHA loans can also be does for refinancing. They are not only for purchasing a house. HUD owns and operates FHA, which is a program designed to help borrowers who might have difficulty buying a house. If the borrow…
In recent years, low interest rates and creative home financing have helped create a generation of new homeowners, pushing the U.S. homeownership rate up to an all-time high of 75 percent. But the recent and steady rise in interest rates and “rate resets” for many adjustable-rate, low-payment mortgages is now cause for broad, national concern. The federal government, in an attempt to curtail use o…
In recent years, low interest rates and creative home financing have helped create a generation of new homeowners, pushing the U.S. homeownership rate up to an all-time high of 75 percent. But the recent and steady rise in interest rates and “rate resets” for many adjustable-rate, low-payment mortgages is now cause for broad, national concern. The federal government, in an attempt to curtail use o…
I had a guy call me yesterday and the first thing he asked me was, “Are you a broker or a direct lender?”. Well, this isn’t my first rodeo, and I knew immediately where he was going with this. However, I asked him why he would ask me such a question just to hear his reply. He said a broker took him to the cleaners a while back, and he only wanted to deal with a direct lender. The first thing to kn…
I had a guy call me yesterday and the first thing he asked me was, “Are you a broker or a direct lender?”. Well, this isn’t my first rodeo, and I knew immediately where he was going with this. However, I asked him why he would ask me such a question just to hear his reply. He said a broker took him to the cleaners a while back, and he only wanted to deal with a direct lender. The first thing to kn…
There are several mortgage companies that offer a rich array of loan products of services. Below is short list of these mortgage companies. Fannie Mae Mortgage Company An industry giant, Fannie Mae Mortgage Company is one of the leading companies that offer home loans. The products and services of this mortgage company make it possible for low-, moderate-, and middle-income families to buy homes o…
Posted in Refinance