If you went to the doctor and he told you that you had two weeks to live you might decide you needed to get a second opinion. Likewise if a mechanic told you that your engine was shot when all you thought you needed was an oil change you would probably seek another opinion prior to replacing your engine or buying a new car-or at least I hope you would.
In mortgage lending it is no less important to obtain a second opinion. In many cases I represent the second opinion that people seek. Why? For people that don't know me or my company or our reputation, the most natural move when considering obtaining a mortgage loan is to stop by their local bank. Most folks have their bank accounts, credit cards, and auto loans from their bank. So it is not unreasonable for people to go there first. They need to borrow money. Who has money to lend? Why the banks do.
Many people also have the idea that the "best" lenders are banks. What comes to mind when one says "best" with regard to mortgage loans? Low rates, an easy process because after all, they are your bank, they know you-at least that is what most folks think.
I am not going to kick banks in the shins with this essay-but I am going to tell you that your bank may not be the "best" place for you to get your mortgage loan. It might be-but but then again, maybe not. Banks do other things besides mortgage loans. They have depository accounts, financial services, auto loans, credit card divisions, and many types of consumer lending products. A bank doesn't necessarily specialize in one thing-other than storing your money. (At a very low return, I might add.)
The bank may not in reality have the lowest interest rate. Lately this spring our company has been able to give quite a few of our clients lower rates, better closing costs, and a faster path to closing than the bank we were in competition with. But let's say that all things are equal-the rate, the closing costs, the speed with which the mortgage can be closed. Even so we offer something banks don't- more flexibility. What that means to you as a consumer is more choices and more opportunity. We specialize in mortgages. That is all we do. We won't sell you another credit card, ask you to open a a Christmas account, try to refinance your car, or offer investment services. It's also true we won't give you a toaster or a savings bond if you do a mortgage with us-we have to draw the line somewhere
Many people are savvy enough to know that their credit score is important when obtaining mortgage financing. The credit score impacts the interest rate, the loan program and whether or not you will ultimately be successful in being approved for your mortgage loan. While not true across the board, it is often true that banks require higher credit scores to approve borrowers for a mortgage loan. This is especially true of FHA, USDA, and VA borrowers.
So far this spring we have had a parade of clients who have been turned down by their bank because their credit score wasn't as high as the bank required-however, the score was perfectly fine for the mortgage program for which they applied. In this one way banks tend to be quite conservative-they are looking for examples of excellent credit.
As we know all too well-there was a mortgage meltdown in 2008-caused by speculation in housing, the sale of worthless loans, and the subsequent economic crash that impacted a large segment of the population. So it stands to reason that people who formerly had impeccable financial credentials have had some bumps and bruises on their financial profile. There are many examples of folks the banks turned away that we have been able to approve.
It's not that we can approve anyone-we can't. The lender, no matter if they are a bank, broker or mortgage banker has to have a reasonable expectation that the borrower has the habits and ability to repay the loan. So if someone has never paid a bill on time in their life-we probably can't help that person. But given that we have more than one source of money we are able to help more people than a bank. We choose our investors carefully so that we can cover as many niches in the market as possible-so what may not be possible at one of our lenders may be possible at another.
So the moral to the story today is-get a second opinion-whether it is interest rate, closing costs or if you have been declined by another lender. I can't promise anyone that our rates will always be better or that we can approve your loan for sure-but all you have to lose is the time it takes to find out.
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