Before
getting your home ready for selling, always consult a REALTOR®. Each
property is different and the following story should be used as a guideline
to get you ready for prepping your
property.
Correspondent lenders: a new choice
for home financing
By Jeanette Joy Fisher
When you begin
your search for a new home, one of the first things to consider is
where you'll get the money. Your basic choices will be mortgage brokers
and banks.
Your first instinct may be to go with your local banker, because
you know them from doing business with them for other things, such
as your checking and saving accounts. But you've probably also heard
that mortgage brokers can get you a better interest rate, since they
deal with hundreds of lending sources. It can be confusing, but there's
a third source of funding that combines the best of both--the correspondent
lender.
In order to understand the differences, let's look at how the
lending process works in each case. 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 an advantage in that 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.
The third alternative, correspondent lenders, combines the best
features from both groups. 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, as soon as a loan has
closed, it's sold to another lender at a previously negotiated
price. It's the best of both worlds for you as a borrower. You'll
be dealing with the banker who is funding your loan, yet that banker
is able to shop your mortgage around, which can obtain you a lower
interest 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 they may not always be easy to locate, with a little digging,
you may find that a correspondent lender offers an attractive alternative
to a banker or mortgage broker when it comes to shopping for your
next home loan.
