Wednesday, June 30th, 2010 at
6:30 pm
The mortgage market is extremely competitive, so much so that lenders are vying for your business. If you are planning on going for a new home mortgage, then it’s time you know the various kinds of lenders who are involved.
Mortgage banker
This is a company or an individual that is involved throughout the entire cycle of the loan. So right from beginning till the end of the loan tenure when the loan is closed, the mortgage banker is involved. You may directly interact with the mortgage banker for all your transactions. The mortgage banker makes his money from the new home mortgage via all the associated fees, closure costs as well as points earned during the loan cycle. Once you close the loan, you could choose to continue maintaining the relationship with the mortgage banker or they might even sell off the loan to another person or entity.
Mortgage broker
You maybe suffering from a poor credit score or you may just not have ample time on your hands to shop around for the new home mortgage. In such situations, opting for a mortgage broker to help you out is the best way. The mortgage broker is essentially a middleman of sorts who will intervene between the borrower as well as the mortgage banker. He or she has a thorough knowledge of the best deals around in the market or which lending companies are more likely to grant loans to sub prime borrowers or those with a bad credit history.
Credit unions
If you are already a member of a credit union, then this can well be one of the best places to shop around for a new home mortgage. They can provide you with lucrative low interest rates which you can leverage to your advantage. There are many workplaces, associations as well as unions that offer their very own in house credit unions.
Government loans
Many borrowers have the wrong impression that the government actually makes new home mortgage loans. However that is a misconception. In most cases the government supports or backs up certain loan types. This support or backing by the government in turn helps lenders to be more likely to grant these loans. It could be because they have the added assurance of support and intervention from the government. You can easily approach your very own neighborhood local banker to find out the best deals that are backed by government authorities.
Direct lenders
You can also check with online mortgage companies that can assist you with finding a good quality direct lender. They may even help you to find a reputed home loan broker of choice. They usually suggest such lending institutions based on your individual requirements and financial goals. Comparing rates online is a great way to arrive at an informed decision and to assess schemes from various lenders. So if you happen to shop around a little bit or just asked around for the rates you could actually get a good mortgage deal.
By: Alan Lim
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Tuesday, June 29th, 2010 at
11:16 pm
A broker acts as an intermediary who sources loans on behalf of individuals or businesses.
Traditionally, banks and other lending institutions have distributed their own products. However as markets for mortgages have become more competitive, the role of the broker has become more popular. Today in most developed markets brokers are the largest distributors of mortgage products for lenders.
Banks’ activities can be divided into retail banking, dealing directly with individuals and small businesses; business banking, providing services to mid-market business; corporate banking, directed at large business entities; private banking, providing wealth management services to High Net Worth Individuals and families; and investment banking, relating to activities on the financial markets. Most banks are profit-making, private enterprises. However, some are owned by government, or are non-profits. Central banks are normally government owned banks, often charged with quasi-regulatory responsibilities, e.g. supervising commercial banks, or controlling the cash interest rate. They generally provide liquidity to the banking system and act as Lender of last resort in event of a crisis.
The nature and scope of a broker’s activities varies with jurisdiction. For example in the UK anyone offering brokerage is offering a regulated financial activity; the broker is responsible for ensuring the advice is appropriate for the borrowers’ circumstances and is held financially liable if the advice is later shown to be defective. In other jurisdictions the transaction undertaken by the broker may be limited to pointing the borrower in the direction of an appropriate lender and no advice given.
Therefore the work undertaken by the broker will depend on the depth of their service and liabilities. Typically the following tasks are undertaken:
Marketing to attract clients
Assessment of the borrowers circumstances (Mortgage fact find forms interview). This may include assessment of credit history (normally obtained via a credit report) and affordability (verified by income documentation).
Assessing the market to find a mortgage product that fits the clients needs. (Mortgage presentation/recommendations)
Applying for a lenders agreement in principle
Gathering all needed documents (paystubs/payslips, bank statements, etc.)
Completing a lender application form.
Explaining the legal disclosures.
Submitting all material to the lender.
A broker works as a conduit between the buyer and the lender, the loan officer typically works directly for the lender. Most states require the broker to be licensed. States regulate lending practice and licensing, but the rules vary. Most have a license for those who wish to be a “Broker Associate”, a “Brokerage Business”, and a “Direct Lender”.
A broker is normally registered with the state, and personally liable (punishable by revocation or prison) for fraud for the life of a loan. A loan officer works under the umbrella license of their current institution. Both positions have legal, moral, and professional responsibilities as well as liabilities to prevent fraud and fully disclose loan terms to both consumer and lender.
Typically, a broker will make more money per loan than a loan officer, but a loan officer can utilize the referral network available from the lending institution to sell more loans. There are mortgage brokers and loan officers at all levels of experience.
By: Tarun Jaswani
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Tuesday, June 29th, 2010 at
10:35 am
What kinds of government approved mortgage loan programs are available for the lender today? There are actually more programs available today than any other time in recorded mortgage history; and the ability to qualify for these programs is an all-time high.
In this article were going to take a look at FHA, VA, Fannie Mae, Freddie Mac, the HECM, and the SNAP programs available thanks to government regulation of funding.
And FHA mortgage is the term used to describe a direct primary market lending product. What are FHA loans and how do you apply? Your options for application now are through an approved lender, or via the Internet.
FHA, or the Federal Housing Authority was established in 1934 as a part of Franklin D. Roosevelt’s ‘New Deal’. It was the president’s plan to help the country get back on its feet at the end of the Great Depression. FHA loans with a way to provide the funds needed to construct low income housing and provide Americans with the dream of home ownership.
It worked, tremendously well and in 1965, the FHA became a part of the Department of Housing and Urban Development. In the decade since its inception, the FHA has become the largest insurer of home mortgages and has allowed more Americans to live the dream of home ownership at a rate that is in comparable to that of any other country.
The VA loan is simply a spin-off of the FHA loan open only to veterans having served in the Armed Forces. The VA loan was conceived in order to provide returning veterans with the opportunity to purchase homes and start their lives again.
Fannie Mae, or the Federal National Mortgage Association, was established to provide a secondary market for the FHA mortgage loans. In 1938, when President Roosevelt established the Federal National Mortgage Association it was intended to provide a secondary market for lenders to sell mortgages in order to originate new ones.
Freddie Mac, followed in a few years, and was implemented to serve a broader base of mortgages. Although Fannie Mae and Freddie Mac are not direct lenders, our current mortgage system would not be in operation nor would we have experienced the success with homeownership we enjoy today.
The home equity conversion mortgage or HECM is a HUD supervised program that works with FHA homeowners who are over the age of 62 to remain in their homes by allowing them to access their home’s equity, sometimes referred to as the reverse mortgage.
The safe neighbourhood action plan or SNAP is an FHA supervised effort to improve urban communities. The problem focuses own illuminating drug abuse and cry him in urban areas by providing education, school activities, and assistance for project residents.
Now that we’ve covered all the government approved mortgage loan programs, let’s take a look at the FHA mortgage options available. FHA offers adjustable rate mortgages, fixed rate mortgages, energy-efficient mortgages, graduated payment mortgages, mortgages for condominium units and growing equity mortgages.
The more commonly used mortgage products by the individual residential homeowner are the adjustable rate mortgage the fixed rate mortgage and the energy-efficient mortgages.
As we move closer to a more energy efficient energy conscious nation, I believe we will see an increase in the energy-efficient mortgages at a greater concern on the part of HUD that will make room for an increase in energy-efficient mortgages.
The graduated payment mortgage is an option for FHA homeowners who currently have low to moderate incomes but expected to increase substantially over the next few years; this can be compared to a balloon note or the adjustable rate mortgages in use today.
As you can see, the government has played a tremendous role in making possible the dream of homeownership in this country.
Yes, I believe we can say today more Americans live the dream of home ownership than any other nation in the world thanks in great part to the fact that President Roosevelt stepped in at the end of the Great Depression and provided a way to restore faith in the American way of life.
By: Uchenna Ani-Okoye
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