Choosing A Lender

Lenders come in three basic varieties: Banks, Correspondent Lenders and Mortgage Brokers. Banks lend their own money. The advantage of a local bank is that they can pay more attention to the specific circumstances surrounding your transaction, and they may be able to make a loan when other lenders can not.  The disadvantage of shopping for a loan with a bank is that you do not get the advantage of competitive price shopping that you get with a Correspondent Lender or a Mortgage Broker.

Correspondent Lenders and Mortgage Brokers have relationships with many different lenders, and they are constantly shopping the marketplace to find you the best deal. Depending on various market circumstances, different lenders are more competitive at different times. A good Correspondent Lender or Mortgage Broker understands the market, and they know how to find you the best deal.

Correspondent Lenders close using their own money and they do their own underwriting, so they have more control if issues arise during the underwriting process (such as credit issues or issues with the property). Once the loan is closed, they sell the loan to the lender. Since they have relationships with multiple lenders, they may be able to give you a better rate than a specific bank.

Mortgage Brokers serve more as a match-maker between you and the most competitive lender they can find from their stable of relationships. Since they do not do their own underwriting, you are a little more vulnerable to underwriting risks if issues arise. However, as long as you choose a reputable and experienced company, Mortgage Brokers serve an invaluable function in finding the best loan for you.

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