Choosing the Right Mortgage: Differences in Mortgage Lenders

mortgage lender
Published On: August 18, 2022
Tags: mortgage

How Do You Choose a Mortgage Lender?

One of the biggest areas of anxiety when buying a home is undoubtedly finding the right mortgage that meets your needs. Of course you want to secure a loan that has a great interest rate, but it’s also important to make sure you are comfortable with the company that is originating the loan.

With so many options on the market, how do you choose? There are several different types of lenders that can help you with the purchase of a home including big banks, regional banks, mortgage lenders, credit unions, and mortgage brokers.

Let’s take a look at each type of lender and what the differences are between them.

Big Banks

Big banks have a national network of branches, services, and products. You’ve likely used a big bank for some financial product over the years, especially credit cards. Companies such as JPMorgan Chase, TD Bank, and Bank of America are among the largest banks in the United States, with JPMorgan Chase leading the pack with more than $3 billion in total assets.

While some customers feel big banks lack the personalized attention of smaller banks or credit unions, there are some benefits when using a big bank for a mortgage. Big banks often have savvier online interactive tools than their smaller counterparts and may be able to offer more products.

Regional Banks

Regional banks are similar to big banks, but as the name suggests, are centralized in a general region. In Central Pennsylvania, some of the most common regional banks are M&T, Santander, First National Bank, and PeoplesBank.

One of the advantages of using a regional bank, or a community bank, is they are in your area and know your community. Mortgage bankers at regional banks can recommend local appraisers and title companies and may likely know your real estate agent.

Many customers that opt for a regional bank over a big bank cite personalized attention as the biggest advantage.

Mortgage Lenders

Mortgage lenders exist for one purpose – to finance real estate transactions. These kinds of lenders are often less regulated than banks and are able to customize loans to the home buyer’s exact financial needs. Mortgage lenders also tend to have more lending experience and training and are faster to close on a loan than their competitors.

Downsides of using a mortgage lender? They may not have a physical location and often sell your loan to another company – likely a big bank – after closing.

Credit Unions

Credit unions are financial institutions that use a cooperative, non-profit business model. In order to be a customer at a credit union, you typically have to meet some kind of eligibility requirement and there may be a small membership fee. Some local credit unions in the York region are First Capital Federal Credit Union, Members 1st Credit Union, Heritage Valley Federal Credit Union, and Americhoice Federal Credit Union.

There may be benefits to using a credit union for your mortgage over a big bank or a regional bank. Credit unions tend to have better mortgage rates and offer more personalized customer service. Credit unions also typically have lower fees because they pass any savings onto their members.

Mortgage Brokers

Mortgage brokers, unlike banks and credit unions, are an intermediary between you, the home buyer, and a lender. In other words, they do not actually directly provide the funds for the purchase of your home. Mortgage brokers work on your behalf to source your mortgage from another lender. In exchange, the lender pays the broker a commission, also called a “yield spread premium.”

The biggest advantage of working with a broker is they have access to hundreds of different loan products from multiple lenders and can often find the most advantageous deal. When working with a mortgage broker, they take the research off of your hands and find you options to choose from.

Questions to Ask Your Lender

Choosing the right partner for your home loan can be a difficult and time-consuming decision. If you are in the market for a home loan and don’t know where to start, here are some questions to ask of your potential lender:

  • Which type of mortgage is good for my situation? This question will quickly let you know if you are talking to a salesperson or a quality mortgage advisor. The lender should be able to tell you the pros and cons of each type of mortgage option and not push you into one choice quickly.
  • How much will my down payment be? The most common answer to this question is 20% of the purchase price and is the most attractive to a lender. While 20% is ideal, it is not the only option. Qualified, reputable lenders will walk you through different scenarios for a down payment.
  • Do you charge an interest rate lock? During the mortgage process, you may want to “lock in” your interest rate. This ensures your rate will not increase before settlement, but it also won’t decrease either. Many lenders will not charge for this service.
  • What is your average loan processing duration? This is a critical question to ask, especially in today’s real estate market. Some big banks may take longer than regional banks or credit unions. If you are in a hurry to close on your home, the loan processing duration may be a key decision maker for you.
  • What is the best way to reach you? When going through the mortgage process, you will likely have lots of questions and may feel a bit anxious. Or, if you are an experienced home buyer, you may not have any questions at all! If you want to be able to reach your point of contact quickly and easily, ask them how you can reach them. With big banks, you may have to call into a call center or communicate through an online portal. If using a smaller bank or a credit union, you may be able to reach your lender on his or her cell phone.

Choosing a lender can be a tough decision, but the good news is there is an option for everyone. If you are starting the home buying process and aren’t sure where to start, the team at Watermark Land Transfer is happy to answer general questions about the process and point you in the right direction for a lender.

Your Real Estate Settlement Partner in York, Pa.

Watermark Land Transfer is your go-to real estate settlement partner in York, Pa. As a full-service title company, we offer comprehensive title searches, settlements services, and notary services. Don’t let the stress of buying a home be a burden – we are here to help!

Our team of experienced title agents, settlement agents, and commissioned notary publics is here to be your advocate for the entire process. We offer concierge-level real estate settlement services and are ready to help you have a stress-free experience. Contact us online or call 223.848.3546.

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Watermark Land Transfer is a real estate title company in York, PA offering title services, title insurance, closing and settlement services, and notary services. Our goal is simple - to provide our clients and our community with the resources they need for a hassle-free closing. We are more than a title company and work hard to show our clients that we are truly consumer-focused.

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