Types of Mortgage Lenders: How to Choose the One That’s Best for You
For first-time homebuyers, the mortgage process can seem overwhelming and a little intimidating. After all, purchasing a home is a major investment! The key to navigating the home buying process with ease is finding a mortgage lender who will be attentive to your needs and make you feel comfortable and confident with your decision to buy a home. Here’s a guide to finding the type of mortgage lender that’s right for you.
There are three main types of mortgage lenders:
- Mortgage bankers: Full-service mortgage bankers, like Ross Mortgage Corporation, specialize in home loans and control the mortgage process from beginning to end. They originate the loan, process the loan, underwrite and approve the loan and close the loan.
- Big banks: Your bank may also have a mortgage division through which it issues home loans.
- Mortgage brokers: A mortgage broker acts as the middleman between borrowers and mortgage lenders—they do not underwrite, fund or close loans. Once they originate the loan, they will send your application to a mortgage lending company for underwriting, approval and closing.
Now that we’ve identified the three main types of mortgage lenders, let’s take a closer look at the unique advantages of working with a mortgage banker during the home buying process.
Advantages of working with a mortgage banker include:
- A seamless, “full-service” experience: Because mortgage bankers specialize in home loans, they handle every aspect of the mortgage process in house, including loan origination, processing, underwriting and closing.
- An efficient lending and approval process. The ability to manage every step of the mortgage process in house gives mortgage bankers more control over the timing of each phase, and allows them to move a loan from application to closing in a quick and efficient manner. For banks that are managing a higher volume of home loans, or mortgage brokers who outsource the last half of the mortgage process, the closing process may extend well beyond 30 days.
- One lending team. When you work with a mortgage banker, like Ross Mortgage, you will enjoy the perks of receiving personalized service. Not only will you have a dedicated lending team working on your behalf, you will work one-on-one with the same loan officer throughout the entire process. This personal lending team will work closely with you to find a mortgage loan that fits your unique financial needs. When working with mortgage brokers, or larger financial institutions, your point of contact may very well change as your loan passes through each phase in the mortgage process.
- Access to more loan options. Mortgage bankers can also handle many of the lesser-known loan programs available to consumers such as MSHDA down payment assistance, FHA 203(k) loans, rural development loans and other government-sponsored mortgage programs that many banks will not offer because of the cumbersome regulations and requirements involved.
- Local expertise: Because mortgages ARE their business, mortgage bankers are consistently updated on regional program changes and can help you find the best loan option for your particular situation, based on where you’re looking to buy. You’ll work with a local lender that lives and works in your area of the country, meaning they’re well informed about the local housing market.
- The ability to adapt to new regulatory changes quickly. Federal regulations regarding mortgages have become very complicated and it’s quite challenging for financial institutions to adapt to all of the federally required changes. Mortgage brokers are often too small to adapt their business to meet the necessary requirements, while traditional banks are often too big to push new regulations through their system in a timely manner. However, mid-size mortgage bankers are able to adjust and adapt to new regulations in an efficient manner.
- A lender for life. If you find a good mortgage banker that is dedicated to customer service, you will have found a lender for life. Once the closing is finalized, they will keep in touch to let you know when there are new opportunities to improve your financial standing as it relates to your mortgage loan.
By doing a little research ahead of time, you’ll be able to find a lending partner that can meet your expectations and provide you with the financial support you need.
At Ross Mortgage, our personal approach to lending has helped us earn the trust of Michigan homebuyers for more than 60 years. Feel free to browse our blog for more home buying tips and mortgage advice. We also encourage you to take a moment and read what others have to say about working with us.
Thinking about buying a house? Contact us today. We’d be happy to answer any questions you have and look forward to working closely with you on your journey to homeownership!