Today, there is a variety of choices of lenders to choose from and often homebuyers find themselves asking which lender is right for them. Today’s choices include mortgage brokers, banks, Internet lenders and home builders. And each lender has its own advantages and disadvantages of using them. Therefore, I would like to go over the different types of lenders to help homeowners make a sound choice when it comes to buying a home.
Types of Lenders:
Banks - Advantages of banks are that they are regulated by state and federal agencies, many branches provide you with one-on-one access and your current banking relationship can get you a reduced mortgage rate. Disadvantages of banks include being limited to only offers the bank has to offer, some may lack negotiation leverage when it comes to publicized rates and you may not get the best rate.
Mortgage Brokers - Advantages of mortgage brokers include having access to a wide variety of lenders, you can shop for the best rates to save money and you can quickly find another lender if your first application is turned down for some reason. Disadvantages of mortgage brokers include that they are free to set their own pricing and many will mark-up the wholesale rates to whatever they want, services will vary from broker to broker and many function as a lender’s agent and have the lender’s best interest at heart, not yours.
Home Builders - Advantages of home builders is that it’s a good way for first-time homebuyers to qualify and the buyer doesn’t take title to the property until the home is complete. Disadvantages of home builders include them favoring lenders who offer higher rates and sometimes they can pressure you into getting their loan instead of using a lender of your choice.
Internet Lenders - Advantages of Internet lenders are that they allow you to shop for competitive rates online. Disadvantages of Internet lenders include a greater learning curve for the homebuyer to understand the borrowing process and the abundance of spam that comes with it.
With careful planning and consideration, you can choose the right lender for the loan you need. I hope this article helps make that choice.
Keller Williams Arizona Living Realty – Realtor® Cheryl Westwood
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