Most home buyers are financing real estate, which means that almost all home buyers will need to get a real estate loan. So, what are your borrowings? Where can you get a real estate loan? Which type of lenders is best?
Unfortunately, there is no answer to the pat because the best choice for you depends on your personal situation, the type of property you want to buy, and how lender prices compare within the lending community.
You can get credit from a variety of sources, such as:
Nearly 25% of all US real estate loans come from mortgage brokers. This percentage has fallen in half since 2006. A mortgage broker is a middle-class person bringing together lenders and borrowers. A mortgage broker can sometimes be a mortgage banker, but not all mortgage bankers are mortgage brokers.
Mortgage brokers work with different lenders, sometimes hundreds. It is important to ask about the variety of products offered as this will vary from broker to broker. Your choice depends on the number of broker’s employment relationships.
- Fees are paid by buyers or lenders or both.
- Loans to a “couple” mean the buyer does not pay a fee.
- Mortgage brokers can also function as “mortgage brokers” in advance, which means they will negotiate directly with the buyer in exchange for buying the lowest (wholesale) interest rates and fees.
Commercial mortgage bankers
Commercial mortgage bankers, you guessed it, work for the bank. They can represent more than one bank, but the loans they give are bank-funded bank loans.
- Fees are generally not negotiable and are determined by banking policy.
- Credit products are limited to those offered by the bank.
- A banker cannot be licensed as many need only register with the registry.
Citigroup, Bank of America and Wells Fargo are good examples of well-known commercial banks. Commercial banks offer a wide range of services. In fact, you probably have a bank like this in your area.
- The primary source of business is not making home loans.
- Bank rates are competitive.
- Your bank may offer a discount or incentive for your loan if you maintain a savings or savings account at that institution.
Savings and Loan Associations
Savings and Loans receive deposits from clients in savings/money market accounts and pays interest on those accounts. To prevent a recurrence, such as the S&L crisis of the 1980s, President Bush in 1989 signed the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA). Many savings and loans are now regulated by the US Treasury Department’s Office of Savings Supervision.
- The primary source of business is making real estate loans.
- Savings and loans do not have business or commercial loans but are intended for construction, purchase, or home improvement.
- The process of obtaining a mortgage is easier than going to a commercial bank.
These institutions are regularly attacked by competing lenders because credit unions do not pay federal taxes and enjoy certain tax advantages that other credit institutions do not use. They are formed by a group of people with a common interest, such as government and community employees or religious groups.
- Clients must complete qualifications in order to be eligible for membership.
- Interest rates and terms are usually very attractive and competitive.
- Many credit unions do not sell their mortgages in the secondary market.
Anyone with money at the bank can give you real estate credit as long as they comply with federal and state regulations regarding items such as interest rates, fees and fees and provide legal disclosure.