Thursday, September 14, 2017

Difference Between a Mortgage Banker vs. a Mortgage Broker

Mortgage Broker Vs Mortgage Banker


What is Mortgage Bankers


There are several institutions that can provide a mortgage to the borrowers. Banks at the top of the food chain. Then we have Mortgage Lenders or Mortgage Bankers and then we have Mortgage brokers. However, they can be distinguished.

In case of Banks. One can go and open his checking and savings account, apply for a student loan, car loan, credit card. Basically, it covers every financial need of the individual and the corporate.

In case of mortgage banks or lenders. You cannot open a checking account or savings account or apply for car loan or credit card. These institutions are licensed by the state and the government only to be in the business of providing a mortgage to borrowers. So one may ask where do they get their funds from to lend money to people for a mortgage. Just the way borrowers borrow money. These financial institutions borrow money on a daily basis. Some have Line of credit just like normal people have a credit card with a line of credit to spend money on it.

Whether its banks or lenders. One must understand that both these institutions are borrowing money themselves to lend money. Hence explaining why the interest rates are constantly changing because which institution is borrowing money from what source and on what conditions determine its margin that they like to put on top of the borrowed funds in order to lend. Which is why borrowers have to shop for rates with several banks or lenders. You can have a very big and reputed bank but you will find the interest rate being offered by the bank is higher than what is being offered to you by a lender who may or may not be known. As long as the loan is FANIE MAE or Freddie Mac backed. Which are government bodies? The borrower is still safe.

As an example. In 2008 when we had the mortgage crash. President Obama announced that even if the house is underwater meaning the home value is less than the mortgage balance. All loans which are either Fannie Mae or Freddie Mac backed will be allowed to refinance and banks are to ignore the value of the homes.

How would a borrower know, if the loan is Fannie Mae or Freddie Mac backed? Ask your Loan officer or the expert doing your mortgage. “ Is my mortgage being underwritten as per Fannie Mae or Freddie Mac guidelines?”. YES would mean, that your loan is backed.


What is Mortgage Brokers


Mortgage Broker: The last category of institution that does mortgage is called Mortgage brokers. Brokers do not lend money on their own. They have a list of banks and lenders that they are tied to and constantly go through training because a broker can have access to 100 loan programs from different lenders. A mortgage borrower has much wider access to his loan scenario from brokers than he has through lenders or banks.
 
Instead of talking to 10 different banks for what rate he would qualify for. The broker does that for you. Not all brokers are mere brokers. Brokers and can be a combo or brokers and lenders both. Meaning they have their own line of credit to do your loan out of their own funds and sell your mortgage just like banks and lenders as mortgage backed securities or they can do the mortgage using other banks or lenders funds.


When a broker becomes reputed in the business they apply for their own line of credit to do mortgages. Brokers who started with 3 folks in their office have become today’s biggest lenders.

For more information visit www.affordable-payment.com or call 323-705-3191 if you are a California Mortgage borrower or If Texas Mortgage Borrower call 713-463-5181 EXT 154 


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