Different Types Of Lenders In The Home Loan Market

Buying your own home is the biggest dream you have nurtured beneath your heart. The procedure is a complex and serious one and you need perseverance and precision at every step. The first precise step should be to find a suitable lender who can fulfill all your needs. There are several types of lenders operating in the home loan market like the banks, credit unions, mortgage companies and thrift institutions.

So when you enter a home loan market wait a while and judge the credentials of different types of lenders. Then very carefully choose the lender who will cater best to your need. If you want to shop around for lenders in a mortgage industry learn well the specific features of the mortgage loan market.

There are several lenders in the home loan market like:

The Banks

The most common and popular lender in the home loan market is the bank. Your local commercial bank will lend money to you for buying a house. You can also get home improvement loans from commercial banks. If you have accounts in the bank, taking home loan from that bank will mean concentration of all your financial deals at one place.

Mortgage Banks

Mortgage banks are institutions, which offer loans to borrowers only against mortgage. These mortgage banks either lend their own money or operate as brokers for lenders who are not physically present. Mortgage banks are either independent or act as parts of other corporations.

Benefits

If you take the loan from a commercial bank or a mortgage bank the transaction is direct and simple.
The speed of mortgage transaction is pretty fast.
The direct transaction in a home loan deal will help you acquire clear answers to any of your queries.
You can save money on mortgage fees and other domains. If you are dealing with the bank in other areas the bank may offer you a better mortgage deal with lower APR.
Reliability of the banks is another point to consider. These banks remain under the direct vigilance of the Federal government and are guided by strict regulations.

Drawbacks

Your choice will be limited because most banks work on some specific set programs and have few options.
The bank will thoroughly scrutinize your financial condition and then decide on entering a mortgage deal with you.

Credit Union

Credit union is a private bank exclusively for its members. The members usually consist a large group to whom the credit union offers mortgage loans with reasonable interest rate and fees. If you can join a credit union getting a mortgage loan will be far easier.

Benefits

It is like an exclusive bank and the deal is easy with flexible terms.

Drawbacks

This option is not open to all.

Mortgage Brokers

A mortgage broker is not a lender; he offers his valuable service to find the best lender for you against a brokerage fee. Taking the help of a mortgage broker is the best way to shop around for home loans. A reputed broker is sure to avail a good home loan for you. But there are numerous fraudulent brokers in the market, so check well before you enter into a deal with one. It is preferable to work with a broker who has got a government license.

Benefits

The mortgage brokers offer a wide array of mortgage choices to choose from.
You do not have to divulge all your financial details.
They can even crack a mortgage pact for people who face difficulty in finding a mortgage deal.
The mortgage broker will do the shopping for you thus you can save time and energy.

Drawbacks

There are some predators who will harass you with hidden charges.
Some will only look after their interest rather then your interest.
It is essential to work with a license holder but there are many mortgage brokers who do not have license.

Online Lenders

The number of lenders offering easy home loan online is on the rise. You can easily avail a proper home loan through the Internet.

Benefits

You can browse through the profiles of many lenders and compare their quotes.
You can do the shopping sitting in the comfort of your own home saving loads of time, energy and money.
Getting home loan online is a fast and problem free process.

Drawbacks

It is necessary to be watchful to avoid frauds.
As the deal is not happening in brick and mortar, you need to be extra careful about the terms and regulations, interest rates and APR.

Secondary Market Investors

Secondary market investors do not deal directly with the debtors. They purchase loans from banks and the mortgage lenders to ensure the creditors are able to help people with home loans. They are very important in the housing loan market because they control the home loan interest rate and the availability of different types of loans by telling the creditors what type of loan they are interested to buy.

Non-profit Community Housing Grants

Often the government and private institutions grant loans to low-income people. The interest rate and the fees are quite low but usually there is a cap on the loan limit. However repayment schemes are comparatively flexible for first time borrowers. There are certain community-housing organizations, which provide grants to rebuild and repair derelict buildings.

There are several types of lenders doing business in the home loan market. But consider the following points before making the final decision:

Ask for the quotes from the lenders and compare them with the current mortgage interest rates, see whether the mortgage quotes are lower or higher than the current rates.
Ask the lender what amount he wants as direct down payment
If you are required to do insurance on the mortgage, known as Private Mortgage Insurance or PMI ask what will be the total cost and the time length to carry on with the insurance.
Calculate your total monthly payment including the PMI premium.
Ask what is the APR of your home loan and whether broker fees, points or other fees will affect it.
Make sure to have clear calculation and explanation about each and every fee you have to pay.
Ask whether the mortgage interest rate is fixed or variable. If the interest rate is variable then ask whether the loan repayment rate will decrease with decline in market interest rate.

Now, time for some Casual Tips

Always ask friends and acquaintances about the home loan mortgages they have taken and how those are faring.
Check with your local Business Bureau about the reputation and credentials of the financial institution you are willing to work with.
Check well about prior complaints about the financial institution you will work with. The lender should be reliable.
Be careful to avoid fraud lenders and lenders who quote false rates and sucks money out of your wallet quoting extra fees and costs.

So equipped with valuable tips take a brave plunge into the home loan market and fish out the best lender.--------------------------------------------------------------------------------------------------------If you are a business owner get listed at Best Finance Site, part of Localwin Network.