If you’re looking to purchase a new home, you’ll need to get a mortgage loan to finance the purchase. There are different options for getting a mortgage loan but the major options include mortgage lenders and banks.
If banks and mortgage lenders can give you a mortgage loan, then what’s the difference between them?
Well, the difference is that mortgage lenders offer a wide range of loan options, have more flexible credit requirements, and may transfer your mortgage loan to another lender after closing. While banks have fewer loan options and rigid credit requirements.
You can get a mortgage loan from both banks and mortgage lenders but you need to be familiar with their pros and cons to help you make the best choice. Your credit, income, and debts need to meet some qualifications to qualify for a mortgage loan from a bank or a mortgage lender.
Mortgage lenders are usually flexible in their dealings and may pardon you if you delay in payment, however, the same cannot be said for banks. Banks are more strict and rigid with their lending requirements.
Pros and Cons of Getting a Mortgage With a Bank
When getting a mortgage with a bank, you can enjoy special benefits from a bank especially if you’re an existing customer. These benefits may include specific loan programs for self-employed homebuyers end investors and lower rates.
However, getting a mortgage with a bank can be a challenge considering that they’re regulated by strict federal and reporting laws.
Pros and Cons of Getting a Mortgage With a Mortgage Company
Getting a mortgage with a mortgage company has its benefits especially if that’s your first time collecting a loan. Mortgage lenders usually have access to a variety of loan products than a bank. Banks follow certain rules and guidelines to structure their loan programs (which are very rigid). If you’re unable to meet their requirements, then you can’t get a loan.
However, mortgage lenders sell the servicing. They have access to multiple loan programs offered by different loan servicers, mostly National banks. A mortgage company can still close and fund loans directly without the interference of a mortgage broker. Since mortgage companies only service mortgage loans, they can update their process faster and better than a bank. This means you can get your loan faster than when you apply for it at a bank.
In the real estate industry, the ability to close a loan faster is an additional benefit for the mortgage company. Another advantage of closing loans faster is that rates and fees are cheaper for shorter rate lock terms
One of the cons of getting a mortgage from a mortgage lender is they can sell your loan to another mortgage company after closing. However, you have no cause for alarm if this happens to you because the documents you signed with your initial lender are still intact and legally binding for the duration of the loan. No loan servicer can change the fees, interest rate, or other aspects of the loan.
So, would you choose a bank or a mortgage company? A bank would not sell your loan to another bank for the entire term while mortgage companies can guarantee you fast closing and loan originator expertise. If you’re looking to work with the best mortgage lenders in Chattanooga, we at Home Rate Mortgage can help you. With our services, you can get access to multiple mortgage lenders with the right deal for you.