Finding the right mortgage lender
Q: How do I find THAT mortgage lender that’s right for me?
A: Just a few years ago, banks and mortgage brokers were climbing over each other to give mortgages to virtually to anyone who applied.
Plunging real estate prices and tighter lending standards have changed that, making it even more important to find the right mortgage lender with the right deal, whether you are refinancing or buying a home.
Sources have dried up
During the housing boom, large banks and mortgage brokers originated most mortgage loans, but those sources look less inviting today. Reasons why: Mortgage brokers sold most of their loans to Wall Street wholesale mortgage networks during the boom. That Wall Street money has since dried up, greatly curtailing brokers’ ability to offer attractive rates. Also some banks, including JP Morgan Chase, have stopped making loans (even after WE tax payers, actually our government and the Tarp money-another story) to clients of mortgage brokers because the banks say that losses have been too high when they deal with brokers. Actually they took our money and did a little of gambling-still another story.
Some mortgage brokers earned a reputation for putting home owners in risky loans and charging excessive fees. Though there are plenty of reputable mortgage brokers, a study released in 2008 by the Department of Housing and Urban Development concluded that, on average, mortgage brokers charge more in fees than other mortgage sources (things are and have changed).
*Large banks generally trying to restrain their mortgage departments these days, not expand them. They have become less willing to work with less-than-perfect (in most cases) borrowers or to offer rock-bottom mortgage terms. Some of the largest lenders have failed or have merged with other banks. As a result, they have often pulled back from lending, especially in areas (like Lee County-BOO) where home prices have collapsed.
It’s best to think small
Local lenders, including credit unions and regional banks with just a handful of or a few dozen branches, currently are offering the most attractive mortgage and refinance terms. Many of these small lenders largely avoided the subprime lending and risky derivatives that inflicted mass losses on big financial institutions. Today, small lenders are often better capitalized than their larger competitors and more eager to write mortgages. They’re also more likely to understand (it still doesn’t make much easier) today’s difficult local real estate markets.
There’s nothing wrong with contacting some mortgage brokers as well- just don’t assume you can call one mortgage broker and let him/her find the best terms for you.
Next week: Different alternatives/directions and questions before calling mortgage lenders.
Have a real estate question? Write, call, fax or e-mail:
Bob Jeffries, Realtor,
Century 21 Birchwood Realty Inc.
4040 Del Prado Blvd., Cape Coral, FL
239-549-5724 Office, 239-542-7760 Fax