Mortgage processing is mostly concerned with verifying that a borrower meets loan requirements, documenting legitimate justifications for a borrower not meeting loan guidelines and justifying that certain deficiencies won't recur.  The process determines the majority of the mortgage documents that are required of borrowers.  

Specifically, the concerns that drive the mortgage approval process include:   

• Is the property that a borrower wants to finance worth at least the amount of the mortgage to be put on it?

• CAN the borrower, financially, afford the requested mortgage and will they be likely to afford future mortgage payments - referring 
  to the borrower’s financial situation, present and anticipated.

• WILL the borrower, even if they are financially able to repay the loan, actually do so - which refers to the importance a borrower places on repaying debts.  (Many people don’t repay debts even if they CAN afford to do so – it just isn’t important to them.  Lenders  want to be confident that borrowers are not like that before they will lend their money.)

BROKERS VS. BANKERS & BANKS

Based on the approval and underwriting process outlined above, it may seem that some borrowers are more desirable to a lender than others. But, there are so many different types of financing available today that a majority of potential borrowers can be approved for a real estate loan.  Even if they cannot be approved immediately, it is often possible to work on credit or other issues and approve them in the future.  It may be to your benefit to utilize a mortgage broker because of their ability to offer borrowers specific loan products that are not available to mortgage bankers or commercial banks.

It is true that some of the differences between brokers and bankers and banks, as lenders, are beginning less distinct.  But, three major differences between these types of lenders concern the costs and rates involved; how hard they work to match a potential borrower to a loan program; and how many different programs they are able to offer to a borrower.

It used to be the case that bankers were the source of the least expensive loans in terms of rates &/or costs.  However, as the song says, "The times, they are a-changin."  Bankers and banks no longer have a monopoly on the lowest rates and many fees have become standardized because of tradition or law.  

It is important to know, if you are dealing with a "banker", whether the office you are dealing with gets to determine and quote rates from the actual lender's rate sheets.  A large number of "net branching" companies have sprung up in the last few years and many of them produce their own rate sheets with profits for the corporate office that are built-in by raising the rates of the company that actually funds the loans.  At Family Home, we always have access to the actual lender's rate sheets and we are competitive or beat most "correspondent" and corporate lending offices.

You may find completely competitive, or even lower, rates offered by your mortgage broker.  That is because they often offer loan programs that come from wholesale lenders.  Because they often provide those products to mortgage brokers only, wholesale lenders do not have to support the high costs of retail operations which allows them to offer the loan products very competitive rates and fees.

You may find that brokers offer other advantages, such as product variety:  The reason derives from the cost and difficulty in becoming a correspondent banker for each lender-investor, as opposed to becoming an authorized broker for a lender.  As a result, bankers (who lend their own money and then sell the mortgage) generally have relatively few sources to whom they sell the loans.  That means that they can offer far fewer programs.  Compare that to mortgage brokers who are often authorized to originate loans for hundreds (or thousands) of programs from many lenders.  That improves the chances of matching borrowers to products that meet their needs.    Traditional lenders like commercial banks and S & L's are even more limited than mortgage bankers:  They may be very inflexible in terms of rates and fees.  Being totally captive to their own company’s products may prevent them from offering unbiased advice which would create a risk of losing the loan to another company with a better product.  

Finally, brokers become experts at originating loans that actually close, because most brokers do not get paid if the loans they originate do not get funded...as opposed to salaried loan representatives.   It is unproductive for a mortgage broker to pass your loan to just any lender..."like throwing spaghetti on the wall to see if it will stick."  The broker will do the hard leg-work to match borrowers to the best lender and product in the first place.  Because brokers have only lending as their business focus, rather than offering a wide range of services that are unrelated to lending, you may find that mortgage brokers have a higher lever of dedication to originating financing that  actually gets to the settlement table.  

In the end, you are likely to find, as more than 70% of borrowers have, that only a dedicated mortgage broker can offer you the service, product variety, competitive rates and costs and service, that result in your satisfaction  with the company and mortgage professional that you require and deserve.  

Where does Family Home fit into this equation? The answer is: EVERYWHERE!  Because we can act as either a mortgage broker OR banker, we can do the best job for you, and get you favorable rates, regardless of what your situation demands!

different lenders, DIFFERENT RATES - DIFFERENT ATTITUDES

About “rate shopping”:  Make no mistake about it…most mortgage money ultimately comes from 3 huge government or “quasi-government” organizations that fuel the mortgage market by selling bonds to investors.  These organizations are the Federal National Mortgage Association (“FANNIE-MAE”), the Federal National Mortgage Assurance Corporation (“FREDDIE-MAC”) and the Government National Mortgage Association (“GINNIE-MAE”).  Because of competition between them and the mortgages they fund, their rates closely track each other.  This means that most banks and mortgage companies have to pay the same amount, at a particular interest rate, in order to obtain the funds they lend.

As mentioned in the above section, the truth is that the difference in the availability of various rates is based on only four  things: 

1.  The amount of profit that will satisfy a company (the higher the rate, the higher the profit.)  
2.  The number of lenders they have available to fund loans (More lenders means more mortgage programs available and more choice of rates on similar programs.)
3.  The expertise, concern and knowledge of the mortgage originator (More knowledge of the programs available, more expertise in homing in on applicable/available programs and more concern for helping every borrower is what gets the best program at the best rate.)
4.  The quality of the borrowers credit  rating and the size of the mortgage they require compared to the value of the property.  (Those with better credit and more substantial down payments can be given a lower interest rate because funds for those borrowers cost the lenders less money and the loans take less time and effort to approve, process and close.)

Again, the important thing that will vary between lenders is how hard and how quickly  they will work to get you approved and settled   It is our goal to accomplish this as quickly as possible.  But we will also work harder to get you approved, as your own situation may vary from that of the most ideal borrower, when another lender may give up on you.  Please realize that complicated credit issues take expertise, time and effort to overcome.  But, remember that it also costs us money to find every new borrower.  In order to keep costs down, our goal is always to say "No" to as few applicants as possible and to do everything we can to encourage you to come back to Family Home when you need the services of a mortgage professional again. 

The last thing that distinguishes lenders from one another are the fees and points they charge.  Many settlement fees will not vary from one lender to another because they are required and are charged or set by the state or some other third party.  However, the fees that are under the lender’s control can vary widely.  These include the Origination Fee, Discount Points, Administration Fee and Application Fee.  Make sure you get a full disclosure of all fees that will be charged.  Compare them thoroughly.  With Internet lenders becoming popular, you must be aware that many of them are not disclosing all fees when they compete for your loan.  It makes them appear very attractive, fee-wise, to say they have a flat fee, or something like that.  But, that just sets you up for a surprise at closing.  Make no mistake about it, many fees, that are outside of their control, will be charged anyway!!!