Los Feliz Realtors say if you’re purchasing a home in Los Angeles, chances are you’ll need a mortgage, but are you aware there is a difference between lenders? And there are fluctuating fees between mortgage brokers and direct lenders (also known as loan officers). Below we’re going to explain the differences so that you can make an informed decision.
Take for example loan officers at a bank, credit union or other lending institution. Los Feliz Realtors will tell you they are employees who would work to sell and process mortgage packages and other loans originated by their own employer. They often have a few varieties of loan packages and since they’re a direct lender there is flexibility with discount points and specials which are marketed to their customers. You know the person in your bank branch sitting behind a desk in the lobby. That’s your personal banker or loan officer.
The loan officer takes your application and works to get a home loan that suits your needs. Banks like Chase, Wells Fargo, and Bank of America market low rates and specials, however, their “special rates” are often times difficult to be approved. You’ll need to make sure you fit into their little box of rigged requirements. Los Feliz Real Estate Agents say you’ll need stellar credit, low debt to income ratio, a downpayment, and reserve funds before the officer moves forward to process the PreApproval letter.
Understanding Mortgage Brokers
Mortgage brokers are professionals that are paid a fee to bring together lenders and borrowers. They usually work with dozens and sometimes perhaps hundreds of lenders.
Think of mortgage brokers as scouts. After they preapprove you for a loan it’s their job to package up your file and shop it on the mortgage market to find the most competitive lender for your specific needs.
So how does a mortgage broker get paid? The mortgage broker is paid through the closing of escrow from their fees including loan points.
Los Feliz Los Angeles Real Estate Agents suggest you speak with at least two lenders to compare rates and personalities. Remember, this is also a people business and you have the freedom to work with someone you enjoy speaking with and most importantly you trust.
The Big Difference
Online mortgage brokers like Lending Tree may help you find a lender, but what if they’re located in another part of the nation from where you want to buy a home? An online bank may not have a local office where employees can help you one-on-one and if the transaction has a few hiccups not having a familiar representative within arm’s length can be frustrating and scary.
Some out of town lenders aren’t up to speed with specific Los Angeles county rules and regulations which can slow down a transaction or force a seller to cancel escrow losing the buyer’s inspection money or more. These are just a few examples of issues our Los Feliz Real Estate Agents found that caused significant slowdowns in loans made by an out of town lender dealing or mortgage broker.
Los Feliz Realtors say working with a local bank branch and loan officer or direct lender could be a plus. Their staff generally understands the specifics of the neighborhood and local city and county guidelines. Plus, you’ll know where to find them.
On the flip side of the big banks, If you have less then stellar credit, a mortgage broker can usually find a lender that can make loans that a bank fails to get approved — troubled credit is one very common example and it’s not the end of the road. Less then perfect credit still gets approved for a home loan.
Make your lender choice based on the best loan terms and the point of contact personality. You need a team player you enjoy working with and who gets you the best deal.
- Our Los Feliz Realtors suggest you ask questions about the expected time-frame.
- Ask your real estate agent friends that have recently purchased a home for lender and broker referrals.
Get Your Own Personal Credit Reports
Order your free credit reports and scores in all three major credit reporting agencies before you visit a bank or broker. Personal copies of current reports should provide enough details for lenders to offer you an opinion of the types of loans they can offer you. But they cannot guarantee a preapproval until they run a soft credit pull themselves.