When buying a home, the potential homebuyer’s mind usually rushes towards the type of home they want and what features they are looking for but what about paying for it? Are you able to finance this purchase with a mortgage? If so, what do the mortgage terms look like? For most consumers, the loan process can be mysterious and nerve-racking.
Once the decision has been made to purchase a home, the next question is, where should we start with the mortgage process? For the most part, consumers have two options. One, go to a big, retail bank or, two, find a direct mortgage lender that specializes in residential mortgage loans.
What are these differences?
Large banks are typically big institutional offices, whereas direct mortgage lenders are usually smaller operations that have a local footprint and a better understanding of the local market conditions. The big banks are household names which have reputations (both, good and bad) that follow but they are big. As a client, you are one of thousands of borrowers.
Mortgage lenders are more nimble and focused on their niche, and are typically able to make fast loan approval decisions. For example, at Bluefire Mortgage Group, our borrowers typically experience our loans from the origination to closing in approximately 10 days. Since we specialize in mortgage loans, we understand the nuances and challenges that come with our borrowers loan needs, such as those who are self-employed and/or have complex tax return filings.
A key differentiating factor between big banks and mortgage brokers is speed. Big banks have a multitude of banking activities that their energy and resources are spent on where as mortgage lenders focus their efforts on mortgages and being able to close them as quickly and efficiently as possible.
Between the bureaucracy and resources being spread thin, big banking mortgage processes can lag. With the real estate market being ultra competitive, the length of the escrow offered by the buyer can be the difference between getting an offer accepted and not. The length of the escrow can depend on how quickly the financing is able to be put in place. Mortgage lenders tend to be able to get financing in place much faster than big banks allowing you to offer shorter escrow times and giving your offer that much more of a competitive advantage.
A third difference between big banks and mortgage brokers is the loan programs that they are able to offer. At the big banks, they offer their set of loan programs and those loan programs only. Loan officers at the big banks are limited (or incentivized, depending on how you look at it) to the loan programs that that one bank offers. You either fit into their credit criteria box or you don’t. If you don’t, there is not much they can do for you. Mortgage brokers on the other hand have access to a variety of different loan programs and are able to pair you with the loan program that best fits your needs rather than trying to cram you into a loan program that they offer but doesn’t quite fit your needs. They work closely with Realtors and borrowers to determine their needs and then shop among various wholesale lending outlets for the loan package that best fits their situation
Another difference between big banks and mortgage lenders is the licensing requirements. Loan officers at big banks work under the banks licensing so they do not have to go out and get their own mortgage loan originator license or complete continuing education requirements to renew their license each year. Loan officers that work with mortgage lenders are required to get their own individual license and complete continuing education requirements to renew them each year.
During the Loan Process
Once a loan is moved into underwriting, you may be given a general number to call to check on the status of your loan rather than a specific point of contact. If a personal touch is something you are looking for, the big bank may not be the best bet.
On the other hand, your local mortgage lender is generally a more boutique like operation and are able to give you a more personalized experience. Rather than being a another number in a system, you are a valued client who is given more time, attention and education. You will most likely be given a dedicated team to answer any of your questions/concerns. At Bluefire Mortgage Group, we send all of our clients, Realtors, and all parties involved, a checklist with milestone updates every Tuesday during the transaction. This is one example of Our Guarantees that we offer our clients and business partners.
Lastly, when you work with a local mortgage lender, you are helping a small business and are ultimately helping the local community that you are moving into flourish. Rather than working with mortgage professionals that are half way across the country, like those in a big bank, when you work with a local mortgage lender you are working with someone who is an active pillar of the community. They understand that their clients live in their community which gives them that much more reason to do right by their clientele.
Ultimately, you need to do your own research when shopping for a mortgage. Talk to multiple companies and find out what they are offering and how they differ. Research them online and ask for past client references. Then choose the option that best suits your needs and who you feel most comfortable working with.
This is critical decision that you will make so it is crucial to that you have a team of people to work with that you trust and feel have your best interests at heart. To hear how we can help you buy your next home, give us a call at (760) 930-0569.
