Analytical Report Analysis of Different Types of Mortgage Lenders
Purpose of Report • My first time buying a house • Didn’t know anything about the process • Is it important to shop around for a mortgage?
Definition of Mortgage Banker • Is a direct lender • Works alone in deciding to loan you money or not
Definition of Mortgage Broker • Represents several different lenders • Works to match you with the lender that best meets your needs and offers you the best price
How to decide which to use? Compare and contrast the different characteristics, benefits, and risks of each option
Mortgage Bank May have a well-established reputation within the community Subject to state and federal licensing and regulations Mortgage broker May not be as well known or well established Not all states require brokers to be regulated Can check Better Business Bureau or Association of Mortgage Brokers Reliability
Mortgage Bank Will only get one loan offer To comparison shop, you will need to got to another bank and start application process again This can be time consuming Time actually processing loan may be quicker as you are dealing directly with lender Mortgage Broker Is familiar with several regional and national lenders Submits your application to many lenders at once Many online lenders: Lending Tree, Ditech.com Convenience
Mortgage Bank May or may not grant loan If not, you must start the process again at a different bank Mortgage Broker Is familiar with many different lenders and may be able to direct you towards lenders who are more apt to grant your loan Qualifying
Mortgage Bank May save money by dealing directly with a lender No hidden fees Possibility of getting better rates based on standing with bank, i.e., doing other business with bank, accounts in good standing Mortgage Broker Usually charge some type of fee for the service they are providing you May be able to get lower interest rates because of all the lenders they have access to Savings
Summary • There are many benefits as well as risks to both bankers and brokers. • Depends on what is most important to you. • Are you willing to risk doing business with a little known company to get the best rate, or is it worth more to feel the security of working with a more established company if it means a little higher rate?
Conclusion • Based on my research, I feel the right way for me to go would be a mortgage broker. • “Bankers make their salary whether you take the loan or not. Brokers only get paid when the loan closes. Who has the most motivation to get you a loan?”