How to Choose a Lender

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How to Choose a Lender

Choosing a home loan is one of the most significant financial decisions you may ever make. And with so much at stake, you’re likely wondering how to secure the best interest rate, with the lowest closing cost, all while also ensuring you get expert representation through the home buying process. This is where choosing the right mortgage professional to guide you makes all the difference.

About this Post:

In this post I’m going to highlight the three different places a home buyer/homeowner could go for a home loan. The three options discussed are: Traditional Banks, Independent Mortgage Banks, and Independent Mortgage Brokers. I’m going to talk you through the pros and cons of each, and discuss which is best positioned to help in specific scenarios. This should help point you in the right direction when you’re ready to start shopping for a home loan.

Disclaimer:

Now, before we get it into it – full disclosure, I’m a Independent Mortgage Broker – so, you might be wondering if this is just going to be a self servicing fluff piece cheerleading for my team. However, I want to assure you, that’s not what this is going to be. Yes, I’m on team independent mortgage broker, but this post isn’t about my team – if you want a post like that, go here – this post is about how the game is played. My hope is that with this information you’ll feel empowered to make your own decision about where to go for your next home loan. The truth is, there is no one-size fits all when it comes to home loans. Just as every home buyer and homeowner is unique, so are the banks, lenders, and mortgage brokers that serve them. So, for the consumer looking for the best loan terms and professional guidance, you want to be sure you pick the lender and professional that is best positioned for your unique needs. And my hope is that this post helps you in that quest.

Traditional Banks

Banks and credit unions represents the most traditional option for obtaining a home. Typically each branch has its own home loan lending team devoted specifically to helping its customers with their home loan needs.

Who Should Go to a Bank for a Home Loan:

Someone looking for Speciality Loan Products
Well Qualified Borrowers
Existing Bank Customers

Pros

Cons

Independent Mortgage Bank-Retail

An independent mortgage bank is like a traditional bank, in that it can lend it’s own money and participate in the transaction as the lender, but that’s where the similarities stop. An IMB won’t offer any traditional bank products (e.g. checking accounts, car loans, CD’s) and is only in business to offer mortgages. Over the last 15 years IMBs have grown in popularity and have even out paced traditional banks in mortgage lending. Many of the most popular IMB’s have two business channels, those are retail and the wholesale. Here I’m going to discuss the retail side of their business, and below, when we talk about the Independent Mortgage Broker, I’ll discuss the wholesale side of the business.

Who Should Go to an IMB for a Home Loan:

Someone who doesn’t have perfect credit and needs easier credit guidelines than what they might find at a bank
Someone who is planning to devote time to shopping multiple IMB’s to find the best terms

Pros

Cons

Independent Mortgage Broker-Wholesale

Unlike the the transitional bank and IMB’s discussed above, an Independent Mortgage Broker, doesn’t lend money themselves, instead, they utilize relationships with IMB’s & Banks through their wholesale business channel to fund their loans. The Independent Mortgage Broker’s role is to compare options within their pool of relationships, and identify the best lender for their client’s situation. Then, just like a traditional Loan Advisor/Loan Officer, they work with their client and that lender to fund that loan.

Who Should Go to a Independent Mortgage Broker for a Home Loan:

Someone who is looking for the best rate/fees on their mortgage
Anyone who has a unique situation – like a self employed borrower – and they need some non traditional options

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