Mortgage Broker? Who helps you with your loan in Sonoma County truly makes all the difference
People use the term mortgage broker as a sort of generic term for what I do. In reality, there are 3 different types of lending institutions available to consumers and I figured I would just tell you what they are and how they work.
First let me tell you that most loans today adhere to Fannie Mae and Freddie Mac guidelines because once the loan is made, it is then sold to Federal National Mortgage Association FNMA or Federal Home Loan Mortgage Corporation FHLMC.* These entities do not collect payments or “service” loans, they simply help mortgage lenders remain liquid so they can continue to lend. So the bottom line is that we are all basically doing the same thing but in slightly different ways.
*Fannie Mae stands for the Federal National Mortgage Association. Freddie Mac is the Federal Home Loan Mortgage Corporation. For example, Fannie Mae buys mortgages from large retail banks while Freddie Mac buys them from smaller thrift ones. But both help banks make more loans and keep interest rates low
BANKS - You can go to any bank where you have a checking account and they can offer you a home loan. The large banks like Wells Fargo or Chase or Bank of America will typically service loans after they sell them and so that they remain connected to the borrower. You can work with someone right at the branch and they typically start a loan and it gets handed off to someone in a centralized processing center. This feels to me like a self-service kind of a system and can work well if you know what you want and do not need an advisor. If you work with a smaller regional or local bank then you will likely get better service and many times these smaller banks have some options that they underwrite and keep on the books that we call portfolio loans for you if you don’t quite fit in the box.
Next we have Non depository direct lenders which is what I am now. Basically, we are Mortgage Bankers and we act much like the banks do but all we do is mortgage loans. We don’t have checking accounts or tellers and you generally get a mortgage advisor to help you from start to finish on the loan.
Next is the Mortgage Broker and what brokers do is very similar to a direct lender but they put the loan together and send it to a bank or a direct lender to underwrite, approve and fund the loan. Brokers get wholesale pricing and charge a fee for their services so there is no extra cost for their services.
I have been in the mortgage business for over 28 years. The first 16 years I worked as a mortgage broker. For the last 12 years I have been a mortgage banker or a direct lender who has the ability to broker loans. I tell you this just to let you know what lens I am seeing this process through.
I feel like the consumer ends up with a very similar end product but the process can be quite different. I am sure I am biased in this area but I do feel like the key to a good mortgage as part of a healthy and balanced financial health is having a good mortgage advisor.
Have a good day and have fun out there!
Need to know more? Please send me your real estate and mortgage related questions. I am happy to answer you and it may become the topic of a future article.
