The first thing most prospective homeowners think about with regard to a mortgage is, what will be the interest rate? Obviously, the lower the interest rate, the less the mortgage will cost the consumer. However, there are other important issues to think about when applying for a mortgage.
What Type of Institution is Best For You to Deal With
Large national banks in some areas of the country dominate the mortgage marketplace. Examples of these types of banks are, JP Morgan Chase, Citibank, and Bank of America. Large financial institutions set their own guidelines with regard to underwriting requirements for mortgage loans. Most large financial institutions do not pay commissions to third party mortgage brokers. This brings the cost of obtaining a mortgage from a large financial institution down. These banks will, if you take a mortgage out from them, provide you with incentives such as paying you higher rates of interest on savings and checking accounts. If you deal directly with a large banking institution, you should try to develop a rapport with the individual at the bank handling your transaction. This will be helpful to you should there develop problems in the underwriting process.
Online Financial Institutions
The internet provides its own marketplace for financial institutions to advertise regarding mortgage loans. Online financial institutions are better suited to refinancing mortgage loans than initiating mortgage loans on the purchase of a home. Sometimes problems arise when dealing with online lenders because they are not located in the community and may not be familiar with the problems in the local real estate market. There is a benefit from dealing with a financial institution on a face to face basis.
Do You Need a Mortgage Broker?
Mortgage brokers are not technically working for a financial institution. They are middlemen who usually work on a commission basis. They may have contacts with a number of lending institutions. They can be helpful to you with regard to properly filling out the necessary forms required in a mortgage application. They also may be in a position to shop around for the best deal you qualify for. In special situations where you have a problem related to your property or your property is of a unique nature they may be able to find a financial institution to specifically fit your needs. They can also run interference for you with the financial institution and eliminate some of the busy work you may need to do with a direct lender. You should take into consideration however, since they are a middleman, and they will be working for commission, they may bring up the cost of the acquisition of your mortgage.
Conclusion
The purchase of a single family home is usually the largest transaction an individual or family will be involved in. Care should be taken when applying for a mortgage to see that the type of institution and deal you are offered is the most appropriate one for your particular circumstances.
Elliot S. Schlissel is a foreclosure defense lawyer. Elliot has published several hundred articles with regard to foreclosures, mortgage modifications, and other real estate issues. Elliot and his staff of attorneys represent homeowners having financial difficulties and who face foreclosure lawsuits in the Metropolitan New York area. Elliot and his attorneys have developed an expertise in dealing with financial institutions, helping their clients obtain mortgage modifications, and stopping financial institutions from successfully foreclosing on their homes when they fall behind on their mortgage payments. He offers free consultations to prospective clients.
