Finding The Right Mortgage Lender

When looking for a mortgage lender, potential homeowners have many resources available. Traditional mortgage lenders include banks and credit unions. The main difference between banks and credit unions is that banks are privately owned, for-profit business and credit unions are member owned, not-for-profit institutions whose profits serve to benefit the members. Because profits of credit unions are used to generate better interest rates for its members, its mortgage loan interest rates tend to be lower than that of banks. However, not all credit unions are large enough or have the resources to provide mortgage loans or mortgage refinances. On the other hand, large banks are equipped to handle these mortgage loan services, but may have higher interest rates.

Potential homeowners can also look online when finding a mortgage lender. Online sites usually provide easy-to-use mortgage calculators to allow borrowers to quickly calculate mortgages with different rate, term, and down-payment options. Online mortgage sites are usually one of three types, a single lender site, an auction site, or a multi-lender site. Though single and multi-lender sites are self-explanatory, an auction site requires borrowers to fill out a loan application and allows them to choose from competing mortgage lenders.

Another option for finding a mortgage lender is by using a third party. A mortgage broker is a third party who facilitates a mortgage between a borrower and a lender. Unlike a bank or credit union, the mortgage broker originates but does not fund the mortgage loan. A mortgage broker can be compared to a stockbroker, a real-estate broker, or an insurance broker, who acts as an independent agent to negotiate a purchase, sale, or contract on the behalf of a client. Mortgage brokers work closely with mortgage lenders and sometimes they are able to negotiate with the lender to find the best financing option for the borrower. The primary benefit to using a mortgage broker is that, as they interface with a large number of mortgage lenders, they are able to offer borrowers more loan options than traditional banks and credit unions. Therefore, mortgage lenders can be a viable option for borrowers with less-than-exemplary credit. However, mortgage brokers usually charge a fee or receive commission from the lender for acting as the agent on behalf of the borrower.

Another third party that homeowners can look to for help with finding the right mortgage is a real estate agent. Real estate agents may have existing relationships with mortgage lenders that can be used to help their clients find lower mortgage rates. Also, because the real estate agent refers a borrower to the lender, the lender usually has an increased commitment to the buyer to provide the right mortgage with the lowest rate.