Another option: correspondent lenders

When you decide to buy a home the first thought that comes to your mind after you tell as many people as you know, is about how you will pay for it.

The two most popular and obvious options are your bank and a mortgage broker. While both of these entities will probably offer what you need, there is another option; a correspondent lender.

Jeanette Joy Fisher’s article, “ A New Choice for Home Financing: Correspondent Lenders” located on ezinearticles.com explains how correspondent lenders offer not only what you need but also what you want from a loan.

Your bank may be your first choice for financing since they are familiar to you. You may have even been at the same bank for over 20 years.

But then you might hear that mortgage brokers can save you money by offering you a lower interest rate.

“Mortgage bankers are given rate sheets by their institutions, telling them what interest rates they can quote to their clients on any given day. There’s only so much a bank can do, with regard to interest rates, because it needs to remain profitable in order to stay in business.”

Mortgage brokers have a distinct advantage in this regard. “They're not loaning their own money, and are free to ‘shop your loan around,’ looking for the best terms from various lending sources. They make their money by getting loans at discount prices and then marking them up, making money on the difference. Since they have many sources to choose from, they can often find loans at lower rates than most banks.”

Now, a correspondent lender combines the best advantages offered by both bankers and brokers. “Correspondent lenders are similar to mortgage bankers in that they make the lending decision and fund the loan with their own money or credit line”.

However, once the loan is closed, it is sold to another lender, offering the lowest rates and best terms, at a pre-determined price.

You'll be dealing with a banker who is funding your loan. Unlike traditional bankers, this banker is also able to shop your mortgage around, thus obtaining the lowest possible rate.

“Correspondent lenders can sometimes be difficult to find, since they're generally smaller institutions, operating on a regional basis, and it can be hard to tell whether a lender is a broker or a banker, based solely on the company’s name. One way to find out is by visiting the lender’s website, if they have one. You'll normally find a button you can click that will bring up a page containing a detailed description of the company. If the lender doesn't have a website, you may find their phone number in the Yellow Pages.”

Although a correspondent lender may be more difficult to find, it will be worth it in the long run if you are able to do business with one. You will have more confidence and security knowing that your loan is being worked on by someone who uses everything all available aspects of mortgage negotiating and funding.

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