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LESSON 11: LOAN SOURCES -- BANKS, BROKERS AND
INTERNET LENDERS
(continued from previous page)
Home
builders, real estate agencies:Many large home-builders
and real estate agencies own their own mortgage companies. Borrowers
can find a house using the help of a real estate salesperson, then
go into a separate office and get a mortgage from an on-staff loan
agent. The affiliated companies may operate as brokers or bankers.
Internet
lenders:Despite a few high-profile failures recently,
Internet lenders still offer home buyers and refinance customers
an easy, quick and cheap way to obtain mortgages. Some are owned
by off-line financial institutions while others are stand-alone
companies.
See
Tip 1
Depending on the type of borrower you are, you may be better off
shopping one type of mortgage provider over another.Here are some
different borrower characteristics and what type of company best
fits them. Keep in mind that these are general guidelines; you should
shop where you feel most comfortable and can get the best deal.
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What
kind of borrower are you?
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Best
source to shop
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| Excellent credit, easy access
to financial documents, long-time employee of one company
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Internet lender, bank or mortgage
bank
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| Self-employed borrower, doesn't
want to share data about income or assets with mortgage provider
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Mortgage
broker
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| Repeat home shopper,
rate-and-term refinance customer,
financially-savvy
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Internet lender
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| ARM shopper, "relationship"
customer with many accounts at one institution
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Bank, thrift
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| Convenience shopper, wants easiest
loan to get even if it costs more
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Home builder or real estate
agency lender
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No matter where you shop, you'll want to make sure
you're dealing with a reputable firm.
See
Tip 2
Mortgage banks are sometimes
regulated by the same state agencies that regulate brokers. Or,
they may fall under the jurisdiction of a state department of banking
or division of real estate. For thrifts, banks and credit unions,
there are separate federal regulatory agencies.
The local Better Business Bureau is another place
to check whether there have been any complaints about your mortgage
banker or broker.
See
Tip 3
Be extra cautious during busy lending
periods. It's easier for sly mortgage lenders and brokers
to mislead and take advantage of consumers using any number
of tricks, from quoting bogus rates over the phone to slipping
extra costs into loans.
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"Go with a reputable lender, one
with which you have a history."
Donna K. Neal of Community Credit Union, Plano, Texas
"Make sure the lender
is a mortgage company that advertises on the Internet, not
an Internet company that decided to get into mortgages."
Chet Neiss, BestPriceMortgage.com, Lancaster, Pa.
"Efficiency and honesty
mean more than low rates."
Jack Harris, Real Estate Center, College Station, Texas
"Be sure to find out
if the individual loan officer is state certified or licensed,
not just the lending company."
Gary Altman, Capital Mortgage Services, Atlanta
"Find out if the company
has a solid record. How long have the company and loan officer
been in business? Find a loan officer and staff that returns
your phone calls promptly. The mortgage process is complex.
You need a lender with experience, patience and understanding.
Make sure you're comfortable. After all, you're the customer!"
Ann G. Riley, Gilpin Mortgage, Wilmington, Del.
"Look for integrity,
a broker who does what he says and says what he'll do.
Charlie Kontz, Brookhaven Mortgage, Atlanta
"Question the lender.
Formulate some vague questions about your particular scenario,
and wait for a very specific answer. The right answer will
tell you how competent a lender they are."
Gary Altman, Capital Mortgage Services, Atlanta
"Make sure the lender
you select can commit to the rate you are being quoted by
locking in your rate. If you are shopping between a few lenders,
be sure to check with all of them on the same day."
Kris Taraz, Inhouse
Capital Inc., La Jolla, Calif.
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Tip
1: Online lenders offer
special promotions to beat out their competition. Savvy
shoppers can find and negotiate great deals online, leaving
more money in their pockets.
Tip
2: You can find out who
regulates the mortgage brokerage industry in your state
and see if your broker has racked up any consumer complaints
using this Bankrate.com chart: State-by-state
tally of mortgage broker rules.
Tip
3:
Whether you
choose a mortgage banker or broker, it's a good idea to
ask friends, relatives and co-workers to recommend a mortgage
professional, especially if they've recently obtained loans
themselves. When you meet with a mortgage broker or lender
you should explain your desires and concerns about becoming
a homeowner, and then listen to how eager they are to work
with you. After all, no legitimate mortgage lender turns
down a chance to make some money!
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