How to Shop for a Mortgage Company

How to Shop for a Mortgage Company– Dan Morse

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• Did you know there are 4 types of lenders? Banks, Brokers, Correspondent and Private Money lenders.

• Banks use their depositor funds initially and sell the note to Fannie Mae or Freddie Mac. They will underwrite and fund the loan according to FM or FMAC guidelines. The bank will typically send the statements to the borrower– called servicing the loan. Pros—servicing typically stays in one place. Cons– can sometimes take longer to close. If you don’t fit in their program, you won’t qualify. Only one rate to choose from.

• Brokers have many different investor options. Pros– are most able to handle unique lending situations. Many rates to choose from.

• Cons– They do not underwrite or fund the loan in their name. Depending on the relationship with the investor, they may take longer to close at times. Guidelines can change quickly and they aren’t necessarily kept in the loop with the changes by the investor.

• Correspondents are a hybrid between Banks and Brokers. Pros– Several different investors and rates to choose from. The investors (often banks and other investors) permit them to underwrite and fund with their money– allowing control of the transaction. Will typically close on time. Cons– Servicing is typically sold to other companies. Cherry Creek is a Correspondent Lender.

• Private Money investors use money from a pool of privately managed proceeds to fund mortgages. Pros– they handle the servicing. Will finance deals the other 3 won’t do. Cons– interest rate and down payment are considerably higher than other 3 because of the risk involved with the loan.

Let me know if I can help with any questions you have about Mortgages!

NMLS# 162003 – Equal Opportunity Lender AZ MBK#0904024
Dan Morse
Vice President, Licensed Mortgage Professional
1630 S. Stapley Dr #114
Mesa, AZ 85204
602-617-3000

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