Mortgage loans are available from several different kinds of lenders that include thrift institutions, credit unions, mortgage companies, and
commercial banks. Different lenders can quote you different rates and fees, so in order to receive the best deal you should shop around by contacting several different lenders. Make sure you compare
all of the costs associated with closing your loan. The best way to get the lowest interest rate on a mortgage is through a bank lender. The fees involved are the lowest because the loan officer is
usually paid on salary and not commission, and you wont have to worry about getting a fair rate. As long as your average credit score from all 3 credit agencies is 620 or above and you meet all other
requirement guidelines from the bank you should have no problem receiving the home mortgage.
If your credit score is lower than 620 you may have to apply for a non-conforming loan through a financial institution. Shop around at different financial lenders so you can receive the best rate. When you deal with these type of lenders and mortgage brokers the difference in the interest rate can greatly differ between one lender and another.
A broker has access to multiple lenders that can offer a broader range of loan terms and products that you can choose from. Brokers will normally contact multiple lenders regarding your loan application, but they are not obligated to locate the deal that is best for you unless they have contracted with you to act as your agent. Some financial institutions operate as both brokers and lenders and most brokers advertisements do not use the word "broker." Therefore, be sure to ask whether a broker is involved. This information is important because unlike direct bank lenders, brokers are usually paid a fee for their services that may be in addition to and separate from the lender's origination or other fees. A mortgage broker's compensation may be in the form of an add-on to your interest rate, or "points" paid at closing , or both. Points are fees paid to the broker or lender for the loan and are often linked to the interest rate and usually the more points you pay, the lower the rate. You should ask each broker you work with how he or she will be compensated so that you can compare the different fees. Be prepared to negotiate with the brokers as well as the lenders.
Once you are aware of what each lender has to offer, negotiate for the best deal that you can. On any given day, mortgage brokers and lenders may offer different prices for the same loan terms to different consumers, even if those consumers have the same loan qualifications. The most likely reason for this difference in price is that brokers and loan officers are often allowed to keep all or some of this difference as extra compensation.
We recommend doing your research on the current interest rates offered by the banks and financial institutions to get the lowest rate in the market.
For more information on this subject please visit the Federal Trade Commission at http://www.ftc.gov/ or the U.S. Federal Reserve at http://www.federalreserve.gov/.
The information above on bank lenders and mortgage brokers was written in good faith but we can not guarantee accuracy. If you feel our information is inaccurate please email us at [email protected]