Choosing the Right Lender for You
If this is your first time in the home loan market, you probably have a lot of questions. Should you find a mortgage broker or take your business to a savings and loan bank? Would a credit union be a better place to get a home loan?
Choosing the right lender for your mortgage depends on a number of factors—including desired repayment terms, interest rates, and the size of the loan. Depending on your specific financial needs, banks, savings and loans, credit unions, and mortgage brokers all have advantages and disadvantages as your lender.
Banks
Banks are the generalists of the lending field. Home loans may be a significant part of a bank’s portfolio, or home loans may be a tiny fraction of the services that a bank offers. Depending on how important mortgages are to the lending institution, you may be able to get nice interest rates and repayment terms.
The downside of selecting a savings and loan bank as your mortgage lender is that you are limited to selecting from a given bank’s mortgage products. In order to get the best deal, you may have to do a considerable amount of footwork and comparison shopping.
Mortgage Broker
Depending on market conditions, you may have trouble choosing between a bank or mortgage broker. A mortgage broker may be the right choice for the first-time home buyer who doesn’t have the time to comparison shop for the best home loan deal.
Mortgage brokers are in the business of selling mortgage loans from a wide variety of financial institutions. Since the mortgage broker can dip into a number of different sources for loans, he or she may be able to find a slightly better interest rate. However, brokers—just like banks—are in the business to make a profit.
Credit Union
A credit union may be the right lender for your home loan. Community credit unions are non-profit, member-owned institutions. Since they are nonprofit, you may be able to realize a very nice rate for a mortgage, especially if you are refinancing a home loan. The downside is membership. In order to realize the savings, you usually must become a member of the union.
Assembling the financing to buy a home or refinance a mortgage can be a long and complicated process. Don’t get discouraged and blindly commit to a financing deal. To get the best mortgage terms, stay focused on your goals.