In the competitive mortgage lending market, there are several mortgage loan companies that have increased their sales in recent years. It has become a buyers market for home loans. Home loan lenders have increased their loan books to record levels as inventories are low and prices are high. Mortgage lenders are closing loans at higher rates than ever before. There are two major types of mortgage lenders – thrift institutions and commercial banks. As the economy rebounds, the mortgage market will probably see more changes.
Many mortgage loan companies sell their property financing services to mortgage brokers. This gives the broker’s a ready market with which to compete. Because many mortgage brokers work as independent contractors rather than having an established office and purchase team, they may not be as visible to borrowers as larger, regional loan officers. The lack of advertising can lead borrowers to believe that the smaller lenders do not have competitive rates and terms. However, mortgage brokers have the opportunity to be much more visible to borrowers through advertisements in specialty publications and on the Internet.
Lenders are using new online mortgage loan companies to facilitate the mortgage loan application process. Online mortgage loan companies offer free quotes via email. These sites allow the borrower to fill out an easy, short form and get multiple offers from competing lenders. The forms can be completed from anywhere with an Internet connection and the majority of online mortgage loan companies have a toll-free hotline number to use for customer service questions.
While competitive mortgage loan companies are adding loan applications to their books, some traditional lenders are reducing or eliminating home equity loans. The biggest problem with a fixed-rate mortgage loan is that if interest rates drop lower than the contracted amount, the borrower loses money. Fixed home equity loans are tempting to consumers because they provide a lower monthly payment and a longer length of time to repay the loan. However, fixed rate mortgages come with a catch. If interest rates drop lower than the contracted amount and the mortgage lender adjusts the loan terms, the homeowner will be locked into the original interest rate.
In response to new mortgage loan companies offering low rates to borrowers, many originate their business in Mexico, Costa Rica or Jamaica. Mortgage originators are required to meet high ethical standards, including fiduciary responsibility to ensure the company does what it promises to do. However, despite high ethical standards, some mortgage originators are less than honest. Some mortgage originators fail to obtain necessary funding upfront, charge excessive application and processing fees and create a bad impression with mortgage brokers and realtors.
When shopping for mortgage loan companies, be sure to check references and find out where the originator got their quote. Be sure that the quote you receive is not from an originator who is offering to finance your next thousand dollar dream home; most originators are only licensed to give quotes within the state that they operate in. Be sure that the quote includes the total amount of your down payment, closing costs (if any), insurance premiums, appraisal fees and the current market rate for your home type; do not accept quotes that omit any of these items.
Before working with a mortgage lending company, be sure to shop around. Be sure to ask if the lender has been in business longer than three years and make sure to check the Better Business Bureau for any negative reports against the mortgage lending originator. Before working with a mortgage loan officer, be sure to do your research. Find out what other homeowners have to say about the mortgage lender and how satisfied they are with their services.
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