Mortgage Professionals–What’s the Difference?

Finding funding for your new home purchase can be very confusing–should I go through my current bank or credit union? What is a mortgage broker versus a mortgage banker.  Here are a few tips and definitions.

Retail Lender–This would be your local bank or credit union and you would typically work with a loan officer.

Mortgage Broker–The broker is an intermediary who will look at your finances and find a lender who is a good fit for you and will come up with the best terms and rates.  For instance, if you have had past credit issues, they will have a list lenders who are willing to finance cases such as yours.  If you are a VA buyer, they will have a list of VA lenders.

Mortgage Banker–A mortgage banker will fund your loan initially but then sell the loan to secondary lenders. Fannie Mae and Freddie Mac are secondary lenders.

Your realtor can help you with finding possible sources of financing but it ultimately up to you as the Buyer.  Your realtor should not push you toward any particular person as the lender.  Do your own research, don’t be afraid to ask lots of questions.  You will pay for the services of the various types of mortgage people discussed here but many will also be paid by the lender who ultimately has the loan.

Most Important–Get Pre-qualified before starting the home search process!  This will save you and your realtor lots of time and heartache.  You need to know how much you qualify for and if you have any issues in your employment or credit history that should be addressed before making any offers.

Buying in a Seller’s Market

Are you looking to buy a home and have been told its a Seller’s Market?  That means there are more people looking to buy than there are available homes.  Typically, this means a short supply of homes with prices moving up.  If you are on the buying side, you need to be prepared. Hopefully, you are working with a realtor who can get you the real statistics on unsold houses and the time it is typically taking homes to sell.  If the average time to sell is less than 4 months, it is usually a Seller’s Market.  What can you do as the Buyer?

  •  Determine your priorities.  Is it location, size, number of bedrooms, two-story or one-story, size of lot, garage? You can make your and your realtor’s search a lot more efficient if you and your mate have already come to some agreement about priorities. Too often couples start looking at houses and find they have totally different ideas about the house that would work for them.
  • Have your financing in order.  Not only get pre-approved by a lender but also get all of your other paperwork together and submitted.  This will help avoid any nasty surprises. Be honest with your realtor about the price range you that makes you comfortable and what your real maximum price is. Sometimes, if you are willing to go up even a small amount it will open up a lot of other housing possibilities.
  • Be prepared to make decisions quickly.  In a Seller’s Market there may be other buyers who are looking at the same properties.  If you wait several days to make a decision, the property may already by under contract.