When looking for a mortgage, it’s not just the mortgage rate you should be checking out. Choosing the right lender matters when it comes to their expertise in certain areas, where the money comes from, whether they will very conservative or flexible, and whether they will take the time to explain everything.
You will see all types of titles of lenders including mortgage planner to home mortgage consultant to broker to banker to senior loan officer.
“Most of the names mean the same thing whether it’s a mortgage professional, loan specialist, loan officer or loan originator,” says Jordan Roth, vice president of GuardHill Financial Corp. in New York City.
Roth’s been in the industry for 16 years.
“I’m always reading up on all the trends, any changes or regulations so I can properly navigate for my clients,” he says.
So, he understands why home buyers are confused by it all. There are a lot of moving parts. Many who seek a home loan head to the big branded entities such as Chase and Wells Fargo. They advertise a lot, so people remember their names.
Some home buyers will many times opt to talk with their local credit unions or banks. Sometimes, the generational relationships at these establishments are strong options, he adds.
But before heading anywhere, Roth suggests understanding the different types of lending models out there, and how to find the right lender for your particular situation.
Here are the different lending models to understand:
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Branded entities
Branded entities are your direct banks such as Wells Fargo and Chase, local savings and loans, and credit unions.
“Credit unions had been taking a back seat, but are becoming more prominent,” Roth says. “They are looking for long-term relationships and use the mortgages to capture the client. So, they can offer checking, savings and some highly functional investment advice.”
Correspondent lenders
Correspondent lenders are mortgage lenders that originate and fund home loans in their own name, Roth says. Shortly after the loan closes, they sell these loans to larger mortgage lenders such as Fifth Third Bank or even regional banks. GuardHill is a correspondent bank.
Mortgage brokers
Mortgage brokers are the middlemen that work between the banks and the homebuyers. They help shop around to get people the loan that fits their situation. GuardHill also helps clients as the middleman.
“We work with savings and loans in New York that are not FICO driven,” he says
For instance, he had a man who was buying a $1 million home with 22 percent down payment. He was being turned down by every institution. He had a credit event that caused his credit score to drop to 680. GuardHill was able to find a bank that was OK with that because of the man’s strong assets.
“Each of these various platforms has space in the residential landscape,” he says. “But everyone’s scenario is different, and where someone goes might depend on what their story is.”
There might be two homes in suburban Illinois side by side selling for $400,000. One client puts down 25 percent and has a 760 credit score. The other house is being bought by someone with a 740 score, but was late with a mortgage payment two years ago. One of the buyers is self-employed, and one is a W-2 person.
When everything is said and done, they most likely wouldn’t end up with the same type of loan, the same interest rate or anything else similar, he adds. There are many specifics that go into writing a loan.
“The lender should properly guide the client on what their options will be,” Roth says.
For those with not that great of credit, Roth suggests doing a query on Google and ask for those lenders who specialize in credit that is marginal. He encourages people to research what Fannie Mae and Freddie Mac’s minimal credit score ares, and then go the next step to find out who is in your local landscape of lenders. Do a quick check on Yelp, LinkedIn and other social media platforms to see what people say about certain lenders.
“The most challenging aspect is to relay to your client that every transaction is unique. Just because your friend achieved a mortgage with a great interest rate doesn’t mean you will be able to,” he adds.
Roth urges people to speak to their financial adviser whether that be their personal finance person, real estate agent, attorney or CPA about their references for lenders.
“The most important aspect of my profession is communication. I’m amazed at how many clients speak to me that their last mortgage professional just disappeared or didn’t return emails or phone calls in a timely manner,” he says.
People are putting down all of their life savings into their homes. They should feel they are protected and guided well, he adds.
When researching, make sure to add in that you are a veteran, a single mom, a firefighter or any other scenario of situations that could get you a better loan or a less expensive one. Look for lenders that specialize in your situation. You could also be lucky enough to find special programs for down payment or closing cost assistance because of your particular situation, profession or location.
