Different Ways to Get a Mortgage Loan
The most substantial financial commitment you will likely make is a real estate loan. You will probably be tied into a contract for a few decades, which is why the option you choose is so important. The type of loan that is best will vary from person to person. Here are the different sources you can get a loan from how they stack up to each other:
Mortgage Brokers
Your choices will depend on the number of working relationships the broker has developed. They work with different lenders, even as high as hundreds. It is vital to ask about the different products they offer and to go to several brokers. A mortgage broker acts as the middle-person connecting lenders and borrowers. The lender or buyer or both pay fees. Loans at par mean the buyer does not pay the fee. There are also “up-front” mortgage brokers who can negotiate the fee with the buyer so that they can get the lowest interest rate and fees.
Commercial Mortgage Bankers
A mortgage broker could be a mortgage banker, but not all mortgage bankers are considered mortgage brokers. Mortgage bankers could represent more than one bank, but the bank funds the loans they negotiate. The fees are usually not negotiable and are set according to bank policy. Products are limited to what the bank offers. Mortgage bankers are only required to register with the registry and do not need to be licensed.
Commercial Banks
These offer a variety of services besides real-estate loans, and their primary source of business is not in mortgages. Bank rates can be competitive, and your bank may offer you a discount or incentive on your mortgage if you keep your checking or savings account with them.
Savings and Loan Associations
They pay interest on savings or money market accounts customers deposit money into. Their primary source of business is mortgage loans. Savings and loans do not provide commercial or business loans, only loans for construction, home purchasing, or home improvement. It is easier to get a mortgage this way than through a commercial bank.
Credit Unions
These financial institutions enjoy tax advantages, which is why they are frequently under legal attack from competitors. They are formed from people with a common interest such as community education, religious groups, and provincial governments. Some require specific qualifications for members to join. Interest rates and terms are quite competitive. Most credit unions do not sell their products on secondary exchanges.
Private
Technically, anyone can provide a real estate loan as long as they comply with federal and provincial laws concerning interest rates, fees, charges, and present legally required disclosures.
Stock Brokerages and Online Lenders
Many firms who typically deal with stocks, investments, and mutual funds also deal with mortgage loans. These sellers can carry back financial tools like a mortgage, trust deed, or land contract. You may not need an appraisal or title policy, but you should still get these anyway. This may not be the best option if you prefer to meet your lender in person. Only contact reputable and known companies with secure sites and look out for fly-by-night vendors.
