Thank you visiting our site! You’ve taken a great first step looking into your options with a true mortgage broker. We hope you find the content below useful. Then when you are ready to get started go ahead click on of the yellow apply now buttons or give us a call.
Full service banks are known as federally chartered financial institutions. They offer mortgage loans along with other banking products like checking and savings accounts and business and commercial loans. Many also offer investment and insurance products. Mortgage loans are simply one aspect of their business. The Federal Deposit Insurance Company (FDIC) regulates and audits full service banks. On the other hand, individual states regulate mortgage companies, and more stringently as well. Banks tend to have more stringent underwriting guidelines. The Loan Officers who work for these major banks are in most cases not licensed mortgage professionals and only registered with the NMLS under the bank. As such these loan officer in most cases can only offer you that banks loan options.
Most mortgage lenders in the U.S. are mortgage bankers. A mortgage bank could be a retail or a direct lender – including regional banks, online mortgage lenders like Quicken, or credit unions.
These lenders borrow money at short-term rates from warehouse lenders (see below) to fund the mortgages they issue to consumers. Shortly after a loan closes, the mortgage banker sells it on the secondary market to places like Fannie Mae or Freddie Mac, or to other private investors, to repay the short-term note. The Loan Officers that work directly for these bank-chartered lenders are typically Licensed under a DBO MLO license and have sat and passed a mortgage lending exam. These tend to be very professional Loan Officer, however while in most cases they have the ability to shop your loan around they do not because they are heavily incentives by their comp plan to push their banks rates and products.
A Mortgage Broker works as an intermediary between you and lenders. In other words, mortgage brokers don’t control the borrowing guidelines, timeline or final loan approval. Brokers are fully licensed professionals who collect your mortgage application and qualifying documentation and can counsel you on items to address in your credit report and with your finances to strengthen your approval chances. Many mortgage brokers work for an independent company so they can shop multiple lenders on your behalf, helping you find the best possible rate and deal. Mortgage brokers are typically paid by the lender after a loan closes. The Loan Officers that work in independent broker offices typically have the most licensing to their name in most cases holding both DRE (Department of Real Estate) license as well as a NMLS MLO (Mortgage Loan Originator) license. These LO’s have sat for several hours of education, exams, and annual re-testing.
This one’s easy, right? A lower interest rate will give me a lower payment and save me money? This isn’t always the case it’s important to know the costs of the loan as well as the cost of money over time by going backwards in the amount of years you have left to pay.
A Shorter term normally comes with a lower interest rate. This is the best way to save the most money. The draw back for most is paying what is in most cases your largest debt in a short amount of time can equal an unaffordable payment. However, if you can afford it this is something you really should consider.
Extracting $$ out of your equity can at times be the cheapest borrowing option the average homeowner has. In most cases you can do just about anything you want with the funds, home improvements, pay off large debts, take a vacation, or make a large purchase. What to keep in mind with a cash out loan is that it normally comes with a higher interest rate than a straight refi.
Lender will want to make sure you can still afford the new mortgage and will most likely require:
- Last 30 days of pay stubs
- Last two years W2’s
- Last two Federal Taxes, if self-employed or have rental property
- Recent Award Letters for any fixed income
Assets are not always needed on a refinance, but if you are paying for any costs outside of the loan or are needing to show reserves due to the type or program of loan you selected lenders will want to see your last two months of bank statements.
Typically, any time you are using your home as collateral for a loan a lender is going to require that the home be appraised by an independent appraiser. In this case most of the time the appraiser looks backwards at what your neighbors may have sold for to establish your homes market value.
Lenders want to ensure that no other liens have been placed on your home since the time you purchased it. To do this they require title insurance from a title company. In Northern California this same title company will handle the escrow as well ensuring the lenders funds are used how they were approved, that the new deed gets recorded correctly and any old liens are fully paid off and released.
Most all loans have fees. If you are being offered a no fee loan you might want to ask yourself how the company offering it is being compensated for their work? Are the fees built into the rate? ALL lenders should be disclosing you the fees for your loan on a universal form called a “Loan Estimate”. You should pay especially close attention to Box A of the second page of this form. This is the area were most lenders will put their cost and any junk fees.