prior to buying a home, you will need to choose carefully who you’re going to work with through the home buying process. The process will start with your real estate agent, though your mortgage loan officer can be almost as important. They will advise you on refinancing or home equity loans if you already own a home. Selecting a trusted loan professional wisely because once you have a loan, you will likely to rely to them for years.
Definition of Bank and Mortgage Company
Full service banks like big banks or credit union are known as federally chartered financial institutions. They can offer mortgage loans along with other banking products like checking and savings accounts and business and commercial loans. Many banks may offer investment and insurance products. Mortgage loans are one aspect of their business. The Federal Deposit Insurance Company (FDIC) are the one’s responsible for regulating and audits full service banks and on the other hand, individual states regulate mortgage companies.
Mortgage Loan Originators
Mortgage loan originators they are the original lender for loan and has to go through very difference processes between federally chartered banks and mortgage companies. To be a loan originator at a bank, one require to register with the National Mortgage Licensing System (NMLS). They are also required to be fingerprinted and checked for any criminal background. Mortgage loan originators with a history of financial crime such as fraud cannot practice mortgage origination. However, the FDIC does not require the loan originator to demonstrate any specific knowledge of mortgage practices or programs.
A loan originator needs extensive training To work at a mortgage company. They must pass two required examinations: a national exam and an exam for each state in which they want to practice. These Exam stress an understanding of the business and consumer protection laws. Once a loan originator pass and obtains a state license, they must renew each one annually.
Due to the extent of a bank’s financial activities, banks service most of their mortgage loans. After your loan closes, you still have monthly payments to the same bank that originated the loan. Many borrower see this as an advantage to using a full service bank. But your lender may sell your loan to another institution after closing. If this happens to you, no need to worry because the loan documents you signed with your original lender are legally binding for the life of the loan. A loan servicer or the lender cannot change the interest rate, fees or any other aspect of the loan.
Mortgage Company Advantages
There are various advantages to using a mortgage company for your loan. First, they may have access to a wider range of loan products than does a full service bank. Each banks structure their own loan programs within guidelines set by Fannie Mae, Freddie Mac, FHA and VA. However, when your situation does not fit within their criteria like having a poor credit rating on your credit history and other criteria, they will decline your loan.
Mortgage companies like private mortgages Canada, mortgage broker Oshawa, and private lending in Ontario sells the servicing. This way, they may have access to loan programs that are structured and offered by a variety of loan providers, usually big national banks. Unlike a mortgage, the mortgage company still closes and funds the loan directly. This is because these companies only service mortgage loans, they can streamline their process much better than a bank. This is a great advantage when you are lending money, meaning your loan can close quicker.
Bottom Line for Private vs. Bank Mortgages
So which one do you choose? A full service bank ensures your loan will stay with the same company for the entire term. Do be sure to make sure that the traditional bank does service their own loans. On the other hand, a mortgage company may offer fast closings, product availability, and loan originator expertise. But, the individual is often the most important aspect of home loans. They both kinds of companies have fantastic and knowledgeable loan originators.
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