Home Buyer's Recession Survival Guide - Getting A Mortgage From Different Types Of Lenders

It's no longer the way it was in our parents' day: You needed a mortgage, you went to the bank. Mortgage money these days can come from a variety of different sources.

Mortgage Bankers

Although you will hear many people toss around the title of Mortgage Banker, they are not truly deserving of the title unless they represent a lender who is large enough to actually originate pools of loans which they can directly pass on to Fannie Mae, Freddie Mac, Ginnie Mae or established Jumbo loan investors. Many large mortgage companies are subsidiaries of major banks, but some are not. And the ones that just use the name but are just brokers in disguise, are just downright dishonest.

Mortgage Brokers

Mortgage Brokers have agreements with wholesale lenders and investors. They are essentially only "bringers of the deal" or middlemen. They have little or no influence on the loan decision, and all they can really do after a turndown is to pitch the deal to someone else.

Direct Lenders

These types of lenders basically have their own money in a pile and they just lend it out on mortgages. This type of lender can vary from just a single investor who does this for a living, all the way to large institutions.

Portfolio Lenders

These types of lenders were once called S&Ls or Savings & Loan companies. They create loans for their own portfolio rather than selling it in the secondary market. They tend to charge a bit more, but generally seem to have greater latitude thus are easier to qualify for.

There are also Wholesale Lenders, Correspondents, and a dizzying array of other titles, but essentially, these are the types that most people will end up dealing with in one way or another.

The first thing you should do when you're shopping for a good rate on your mortgage is to turn off the TV set and put the newspaper away. The ads you are constantly being bombarded with offering you absurdly low interest rates on mortgages are just that: Absurd.

Not only do those rates come with enough fine print that you would need a week with a magnifying lens to read, but the rates change each and every day. Television commercials are often taped months in advance, so the rate they are quoting is immediately suspect.

Almost all Mortgage Rate Advertising has some kind of fudge factor built into their Annual Percentage Rate (APR). You can bet your bottom dollar that the APR quoted is not going to be anywhere near what you're actually going to end up paying.

The best way to shop for rates is to predetermine the points you are willing to pay and how long you want to lock in the rate. The a point is: A discount payment equal to an upfront payment equivalent to 1% of the total size of the loan; this is done to reduce the prevailing interest rate. Locking in the rate means: The lender and borrower have agreed that for a certain period of time while the paperwork is processed, usually three to six weeks, there will be no change in the rate.

Then you can call around to various mortgage companies and very clearly explain to them what you are shopping for. Not only will this eliminate confusion, but you will have a range of estimates that are all based on the same parameters. Asking one company for a certain point/lock-in structure and another for a different price/lock-in ratio just wastes your time.

The unethical mortgage person will tend to lie. "Sure, I can get you X.XX%!" They will do that to get your business. They know that by the time you get around to filing an application the rates will have changed anyhow, and they can always tack on extra cost items later on in the process. One of the best ways to call their bluff is to ask: "If I am in your office before the end of business today, can I sign an agreement which unconditionally guarantees this rate without an extra penny of surprises or add-ons?" 99% of the mortgage people will start hemming and hawing at this point. So you should hang up. When you find the one rare professional who categorically states yes, you know that you have found the person you want to handle your mortgage!

Read The Entire Survival Guide

Home Buyer's Recession Survival Guide - The Subprime Meltdown
Home Buyer's Recession Survival Guide - The Advantage Of Renting Over Buying
Home Buyer's Recession Survival Guide - Why Rent? Why Not?
Home Buyer's Recession Survival Guide - Five Common Mistakes House Buyers Make
Home Buyer's Recession Survival Guide - Get Your Home Sold Quickly & At Your Asking Price
Home Buyer's Recession Survival Guide - Improve Your Home's Value And Sell It For More!
Home Buyer's Recession Survival Guide - Learn The Value Of Curb Appeal
Home Buyer's Recession Survival Guide - Home Staging: Valid Selling Technique Or Fraud?
Home Buyer's Recession Survival Guide - Before You Go House Shopping
Home Buyer's Recession Survival Guide - The Home Condition Checklist
Home Buyer's Recession Survival Guide - Getting A Mortgage From Different Types Of Lenders
Home Buyer's Recession Survival Guide - What To Do After You're Turned Down
Home Buyer's Recession Survival Guide - New Initiatives To Help Get You Approved
Home Buyer's Recession Survival Guide - Isn't HUD An Old Paul Newman Movie?
Home Buyer's Recession Survival Guide - Jumbo Isn't As Huge As He Once Was
Home Buyer's Recession Survival Guide - FHA Q&A
Home Buyer's Recession Survival Guide - The FHA's Credit Requirements Vs. The Bank's
Home Buyer's Recession Survival Guide - Your Credit Score And Your Mortgage
Home Buyer's Recession Survival Guide - Credit Score Confusion
Home Buyer's Recession Survival Guide - Keeping That Credit Score Nice & High
Home Buyer's Recession Survival Guide - Minimize The Interest Payable
Home Buyer's Recession Survival Guide - What Is PMI & Why Do I Care?
Home Buyer's Recession Survival Guide - The LIBOR-COFI-COSI Alphabet Soup
Home Buyer's Recession Survival Guide - REO: Get Rich Quick Or Just Waste Time?
Home Buyer's Recession Survival Guide - Obtaining Flipping Money
Home Buyer's Recession Survival Guide - Consider The Additional Costs
Home Buyer's Recession Survival Guide - What Is Escrow?
Home Buyer's Recession Survival Guide - Tips To Avoid Foreclosure
Home Buyer's Recession Survival Guide - The Changing Value Of Your Mortgage Dollar
Home Buyer's Recession Survival Guide - How To Ride The Interest Rate Spikes
Home Buyer's Recession Survival Guide - Can't Get A Mortgage? What A PITI!
Home Buyer's Recession Survival Guide - Calculating Your Closing Costs
Home Buyer's Recession Survival Guide - Mortgage Broker or Mortgage Banker?
Home Buyer's Recession Survival Guide - The Magic Of A Down Payment
Home Buyer's Recession Survival Guide - A Refinance Checklist
Home Buyer's Recession Survival Guide - Refinancing With Bad Credit
Home Buyer's Recession Survival Guide - The Self-Employed Mortgage Maze
Home Buyer's Recession Survival Guide - VA Loans
Home Buyer's Recession Survival Guide - Offset & Reverse Mortgages
Home Buyer's Recession Survival Guide - The Reasons To Not Buy An Offshore Retirement House
Home Buyer's Recession Survival Guide - How To Pay Less Than $500 A Month
Home Buyer's Recession Survival Guide - Five Easy And Cheap Tips To Save Big $ On Energy

More by this Author


Comments

No comments yet.

    Sign in or sign up and post using a HubPages Network account.

    0 of 8192 characters used
    Post Comment

    No HTML is allowed in comments, but URLs will be hyperlinked. Comments are not for promoting your articles or other sites.


    Click to Rate This Article
    working