Mortgage Banker or Bank for Your Home Loan?

April 16th, 2009 • Related • Filed Under • by tisha

Many people do not pay attention to this distinction, but it is worth talking about. When you take steps in obtaining a mortgage on a house, you have basically two sources from which you can choose to consummate the process. First is a traditional bank or other similar financial institution. The next is through a mortgage banker. There are benefits in using both sources. Helping you sort out the factors in making the decision between the two is important before you begin the process.
Before you begin. A thorough review of your finances is wise in order to be able to tell what you can afford in a house is concerned. Not only is the price of the house a factor, but also, how much are the monthly payments. Then, there is also insurance and taxes. And, to really make this comprehensive, you should factor in maintenance cost estimates as well. A mortgage payment should fit into your budget. And as a gage, the percentage of 29% should be used. That is inclusive of your principle, interest, taxes and insurance. Economy
What about that bank? The traditional bank or bank-type of institution is the first choice. At your local bank, you will find several options offered. You can choose a traditional fixed rate, 30 year mortgage, or you can also look at a 15 year mortgage as well. These loans are considered ‘conventional’ in that they are standard, bank financed loans with no guarantee on the part of the federal government.

They have options that can help fit your situation. Your job is to contact several of these institutions and find a loan that will fit your circumstances. Do not forget to check your local credit union as well. Banks and credit unions will offer you the best rates available.

Mortgage brokers. Just as an independent insurance agent offers policies from several different companies, a mortgage broker operates on the same principle. They have many more options and loan products from which you can choose. Basically, you will pay higher fees with a mortgage banker because that is the way they make their money in the form of origination fees and servicing fees.

These types of lenders have no large bank which backs the loans that they process, so they must use backing outside of their company. You will find these in the federally guaranteed mortgages of a Fannie Mae or Freddie Mac type. Most often, once the mortgage has been closed, you will find them selling the mortgage to another bank. This is merely a transfer and does not change the terms of the mortgage itself.

Determining which one is right for you is not a cut and dried decision. It is a process that depends in part on your comfort level in dealing with these institutions. Many times, a real estate agency can make recommendations that are neutral and reliable, because of the number of real estate deals that they see. They are not immune to the good and bad that goes on in the mortgage funding business. If you take your time and ask around, you can find a good source of money for your home loan in your community.