Where should I apply for a mortgage?
UPDATED: April 12, 2019
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There are many ways a potential homeowner to apply for and obtain a home mortgage loan. Traditionally and still applicable today, loans can be obtained from a direct lender, such as the local bank or savings and loan or credit union, or through an intermediary, such as mortgage brokers, who place loans they originate with both local and out of state banks, insurance companies, and S&Ls. Each of these sources is likely to offer different loan arrangements, and also different terms and conditions even for the same type of a loan.
However, this is also the computer age. Many interested people simply do an online search for companies that process loan applications and in fact make online loan applications for a loan by such a means. However, using this approach has a dizzying amount of issues, starting with entering online your personal information, such as date of birth, location of birth, social security number, and other personal information. There are ingenous assaults online to garner such information, so "word to the wise", trend cautiously.
The role of mortgage brokers, licensed by their state Department of Real Estate, is simply to shop the loan market for the best loan for his or her client. The best type of loan that typically can be obtained for a client is the lowest interest rate for the longest period of time, with the lowest points to be paid by the borrower and no prepayment penalty fee. Mortgage brokers typically get paid out of the loan proceeds with respect to the loan obtained by the client. Meaning, the fee of a mortgage broker for a loan is paid by the borrower out of the loan proceeds that he obtains.
Another option for a person seeking to obtain a loan is via a direct application with a financial institution s/he does business with. Given the relationship the borrower has with the bank or credit union, the chances of obtaining a loan in this manner invariably may be the best course of action for the consumer. Loans obtained directly from a financial institution such as a bank or credit union typically have a better interest rate for the borrower and no mortgage broker fees since no mortgage broker is needed in this type of loan process.
Obtaining a loan to purchase or refinance real property can be a complicated and time consuming process. There is a satchel amount of forms to fill out, many documents to provide, and many documents to carefully review and sign before the desired loan is approved. Given this complexity, it is recommended that all borrowers consult with an experienced attorney who practices in the area of lending practices before any final paperwork for the desired loan is signed by the consumer.