Types of Lenders you Should Know Before Getting a New Home Mortgage

Wednesday, June 30th, 2010 at 6:30 pm  
Comments (84)

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

Related Posts:

Mortgage Broker Vs. Mortgage Banker

Wednesday, February 10th, 2010 at 8:11 am  
Comments (34)

Many consumers think that “mortgage companies” are banks that lend their own money as mortgage. But in fact, any company that you deal with might be either a mortgage banker or may be a mortgage broker.

Mortgage Banker: A mortgage banker is a direct lender, which lends you its own money, although it may often sells the loan to the secondary market. Mortgage bankers (otherwise known as “direct lenders”) sometimes keep servicing.

Mortgage broker: A mortgage broker is actually a middlemen; he first does the loan shopping and analysis for the borrower and then puts the lender and borrower together. Most of the lenders by which the broker finds loans do not deal directly with public.

If you go through mortgage banker, you would save the fees of middleman and could make the loan process quite easier. A mortgage banker would give you direct approval of loan, whereas a mortgage broker gives you information second-hand. But anyhow, many mortgage bankers have their own limitation in what they can offer. An in case, if you present your loan application in poor light, it would lead to a bad impression in front of banker. It is not suggested to lie or mislead a lender, but one need to understand that presenting a loan to a lender is just like presenting your taxes to the IRS; all documents should be valid one.

A mortgage broker charges dramatic fee for every service, but then he has access to wide variety of loan programs. He would also have knowledge of how to present your loan application to various lenders for approval. Some of mortgage bankers are brokers as well. As an investor it is always wise to have both mortgage broker and a mortgage banker on your side. You all need to remember that mortgage brokering is an unlicensed profession in many of the states.

Caroline Mercy is a SEO copywriter for California Health Online as well. She has involved herself in this field for more than 3 years. For further details related to the article you can visit the site http://www.mtgoptions.ca/. . You can contact her through mail at caroline.mercy@gmail.com



By: Caroline Mercy

Related Posts:

Seller Held Private Mortages & Notes

Friday, December 4th, 2009 at 9:46 pm  
Leave your comment

Seller-Held Private Mortgages & Notes

By

Sam Mannino

During my 40 year career as a mortgage banker, I have been asked countless times to purchase or sell seller-held or purchase money mortgages, taken back by sellers of real estate.  Unfortunately, not all of the sellers have been happy with the results.  I often have to tell them that their seller-held mortgage can’t be sold just yet, or it if can, the amount they will receive for the debt is a small fraction of what they are owed.  Sometimes, I have to inform them that the obligation due them is virtually worthless.

Most of their disappointment could have been alleviated by the person who originally drafted the mortgage.  All too often, these legal documents are drafted by realtors or attorneys who may have not considered the final disposition of these obligations, or are unfamiliar with how a seller-held mortgage is treated in the secondary market.  A little extra care by knowledgeable counsel can make all the difference to a seller-held mortgage.

First, understand that a seller-held mortgage will, in all likelihood, be sold sometime during its lifetime. Rarely, even when the parties are family members, does the holder of a seller-held mortgage wish to hold the note the entire term.  More commonly, they want to cash out at some time in the future, which can be accomplished in a number of ways.  The mortgagor might sell the property, and the note can be paid off.  In addition, the mortgage might be subject to a call provision after a set period of time.  However, it is far more likely that the holder of the seller-held mortgage might experience a change of heart, and simply want out of the deal.  In that case, he must try to sell the mortgage.

Purchasers of seller-held mortgages, and yes, there are some, most commonly look for two points:  1) obligations that have been seasoned for a year or more, and 2) a good payment history.  Holders of these seller-held mortgagers need to be informed that good record keeping can pay off in the long run.  They need to know that mortgage buyers will want to run their own credit checks on the borrower and make inquiries as to employment.  (Keep this in mind when you are drafting the original obligation.)  Finally, they will wish to retain a higher yield than most seller-held mortgages carry.  The reason for this is that most seller-held mortgages carry a higher risk than institutionally generated mortgages.  Makers of seller-held mortgages commonly carry higher debt rations, have poor credit, or make little or no down payment.  If a seller-held mortgage carries a market interest rate, the purchaser of that note can only achieve a higher yield by discounting the purchase price below principal.

Holders of seller-held mortgages can do themselves a world of good simply by thinking like a bank at the inception of the debt.  They may wish to allow their borrowers a higher debt ration than a bank, but they should never allow more than 40 percent of a borrowers’ gross monthly income to be applied to first and second mortgage payments, taxes and insurance.  Anything more and the borrower simply can’t afford the property.  When it comes to checking the borrowers’ credit, it is imperative that you thoroughly search for any previous foreclosures.  In addition, avoid any borrowers with really bad credit within the past two years.  Finally, require some down payment.  Remember, if you do have to foreclose, that the down payment represents a real safety net.  Vacant and/or abandoned real estate does not appreciate.

Drafters of seller-held mortgages must be sure to include two key clauses. First, they must make sure the obligation can be assigned by the holder of the mortgage and note, without further permission from the borrower.  It never ceases to amaze me at how often this important language is overlooked or omitted altogether.  Second, if the note is to be marketable at all, the holder and assigns, must be able to make further inquiries regarding both the borrowers’ credit and employment in the future.  Two year old credit reports are worthless, and unfortunately, so are the mortgages which have relied upon them.

A final word of advice, experienced attorneys often receive referrals from local realtors to assist in the drafting of these seller-held mortgages.  But, more often, the interest of the realtor making the referral is not the same as the holder of the seller-held mortgage.  The realtor simply wants to close the sale.  We must keep in mind that the document that is drafted will be in place many years after the closing.  It is then that the work of a competent attorney will reveal itself. A little planning and preparation along with the advise of competent legal representation are the keys to a successful transaction… Remember, people don’t plan to fail, they just fail to plan.

Sam Mannino is the managing director of Investors First Capital and was elected as director emeritus of the Pennsylvania Financial Services Association.  He has served on many committees and advisory boards for the financial services industry.  He is a registered lobbyist for the financial services industry and a business–against-government reform group, Stop-Them.org.  He is life-long resident of State College, Pennsylvania.



By: Sam Mannino

Related Posts:

 Page 1 of 2  1  2 »