When looking to buy a home, one of the most important things to think about is what type of lender you are going to be working with. You may be surprised by how many different options there are.
Banks, large and small: Due to their size, banks have a tendency to be a bit slower. In general, I have seen the banks take weeks to go through a process that takes other lenders days. There may be the chance that you are working with a Private Banking Associate who may get your file through a bit faster. On the negative side, trying to get a loan through a bank’s branch network, 1-800# call center or a low to middle producing loan officer can be painful.
There can also be a challenge with having the appraisal done through a bank’s system. Due to changes enacted by the CFPB, all lenders must use a 3rd party system of ordering appraisals. Banks use their own Appraisal Management Company (AMC). I equate ordering an appraisal to pulling a number out of a Bingo basket. It is random and the pool of appraisers is quite large. Obtaining a mortgage through a bank tends to be a conveyer belt process, possibly in another state or region. This can cause the loan process to take longer as well as be a bit more complex.
Credit Unions: Credit unions can go either way. From life experience a credit union’s functionality and speed are greatly affected by the loyalty you show. Credit unions also draw from their own AMC, and tend to be similar to a big bank. When it comes down to it Credit Unions are a 50/50 shot on whether you are going to have a great experience or a bad one.
Mortgage Brokers: Mortgage brokerage firms seem to be mostly about the individual broker. This can be a good thing when it comes time to shop rates for the client. If you are thinking of working with a Mortgage Broker, you will want to meet them in person and get to know their work ethic to see what to expect during your transaction. There are some downsides such as, appraisal ordering is subject to the AMC of the institution the broker chooses to go to. Some of these lenders broker to big banks, small banks, wholesale entities, insurance companies, credit unions, private banks and more. Guaranteed before your first payment is due the loan, will have been transferred and may do so a number of times throughout the life of the loan. The broker has very little negotiation power during the underwriting process as far as any hiccups on the file.
Mortgage Bankers: A good mortgage banking firm is a worthwhile contact right now. A mortgage banker is usually set up to underwrite and close loans in-house, which means faster turn times, more control and the underwriting staff, closers, funders personally know the people who are handling your loan . Some mortgage bankers even have their own AMC, populated by a smaller pool of self selected appraisers they know well, which can make for the best results for a tight appraisal situation you may be worried about. Most Mortgage Bankers also have constant contact with your loan and have the ability to check status and in turn give you immediate feedback and updates throughout the process. This keeps the control with your Mortgage Banker and allows you to have more input into the process. They are also very likely to service the loan after it closes, so you have a loan life partner in your loan officer.
Online lenders: When looking at online lenders the best way to think of it is, would you want to place the largest purchase in your life in the hands of a nameless, faceless entity? Online lenders are big, with no knowledge of the local market and are subject to large AMC’s. From my experience, they tend to be slow and cause frustration. If a client wants to take a leap of faith and purchase or refinance with an online lender, I am honestly going to try and talk them out of it. I personally would not risk going to an online lender.