By Nicole Donn, US Financial Mortgage
One of our most basic needs is shelter and if your shelter can also provide you with financial security, so much the better! Unless you have enough money to pay cash for a house (which almost no one does), you will most likely need to get a loan. First, you will have to decide who to get preapproved by. Since there are many options, it is a good idea to ask people you know and trust for recommendations. Banks, credit unions, mortgage brokers, and mortgage bankers are some typical options, which are explained below.
Banks: If you have an on-going preferred relationship with a bank, sometimes they will provide excellent rates and terms. In general, banks do not focus on long term financing and have loan officers who do not think outside the box, as mortgages are not their specialty. Bank loan officers are not held to the same standards as non-bank loan officers in that they do not have to be licensed. In addition, if the loan is rejected, you are back at square one. Banks can be an excellent source of home equity lines of credit (HELOCs)
Credit Unions: Most credit unions do not make long term loans and often partner up with a mortgage banker who actually does the loan. Some credit union offer mortgage directly and this can be a good option for well qualified borrowers. Credit Unions can also be an excellent source for HELOCs.
Mortgage Brokers: A mortgage broker typically does nothing but mortgages and must be licensed. They shop around for the best rate and terms and package the loan in a manner that will present the loan in the best light acting as a middleman between you and the funding lender. They get wholesale prices and add on for their services. If a loan is denied, they can take the package to a different lender saving the borrower the trouble of having to start from scratch with a new lender.
Mortgage Bankers: A mortgage banker works for a lending institution that provides you the money for the loan. Typically, they sell the loan after the fact but often carry a loan portfolio themselves. The mortgage banker is a direct lender. Often a company, such as US Financial Mortgage, right here in El Sobrante can function as both a banker and broker with the majority of loans getting funded in house but with the ability to shop around for unique situations making it unnecessary to start from scratch if the loan applied for is not approved. Mortgage Bankers also get correspondent pricing from the lender they sell the loan to which is usually even lower than the wholesale rate offered to mortgage brokers.
Additional sources of financing are private loans which often are called hard money loans usually carrying high interest rates and requiring a large down payment and seller financing which occurs when a seller acts as the lender. The terms on this are completely negotiable. Seller financing does not happen very frequently in this area and it is more common for the seller to carry a small second rather than the entire loan.
About the author: Nicole Donn has been a loan officer in West Contra Costa County since 1983 and loves helping people with their finances by looking at their mortgage in a creative way. She puts herself in your financial shoes and recommends what she would recommend for herself if she were you. She has helped countless people achieve the dream of home ownership. Nicole grew up in San Francisco and has spent most of her adult life in West Contra Costa county. She has been the manager of US Financial Mortgage located at 4973 Appian Way in El Sobrante since 1997 and can help you in either English or Spanish. She can be reached at 510-758-3035 via email at [email protected].