The difference in mortgage lenders is real and could impact you on any number of levels. First and foremost, you need to understand that there are experienced, qualified Mortgage Loan Originators that work for banks, brokerages or correspondent lenders. Working with someone with experience is tremendously important in today’s mortgage lending environment. Mortgage Banking is split up into three very different models:
3) Correspondent Lender
Before I dive into the explanations of what these lending types are, it’s important to have a brief understanding of the different people involved in your loan from the mortgage company. You will have a Loan Originator, who is the person with whom you apply for a mortgage. The next person in the process is typically a mortgage Loan Processor, who takes the information you have supplied to the Loan Originator and verifies everything, requests additional documentation and gathers property specific information in preparation for underwriting. Upon completion of processing, your file will be submitted to an Underwriter for review. Once underwriting is completed, your loan will go into a Closer who will prepare everything for your loan closing. The Closer is typically the one person who is getting your documents to closing and also getting your money to the closing.
Each of these four people has a very detailed and distinctive role inside the mortgage lending process. While parts of their roles may vary from one organization to another, with more responsibility on one role than another, they are each specific steps that take place in the process of getting a loan. The purpose of this background is for you to understand that while you may not see them, there are a number of different behind the scenes people and tasks that are being completed after you meet with your Loan Originator.
Banker: A Mortgage Loan Originator that works in a bank is originating a loan for you based only on their internal products and programs. They will typically originate, process and underwrite your loans all within the same company and they use their own money for closing your loan. Oftentimes, these institutions have centralized processing centers that are in another city or state.
Broker: A Mortgage Loan Originator that works for a brokerage will originate and process your loan in their office, but will then send your loan off to the broker lender they choose for underwriting and closing. They do not use their own money for closing. They could have access to a large number of mortgage companies or to only a few. It truly depends on their size and who they’ve signed up and been approved with as a broker. All processing, underwriting and closing is outside of their control.
Correspondent Lender: A Correspondent lender has both worlds available to them. They establish relationships with multiple mortgage lenders to be able to offer a wide variety of products and programs but also maintain the control of originating, processing, underwriting, closing and funding within their organization. Again, these lenders can be large or small, but the important difference is that they have both the access to multiple options and the control over their internal process of getting your file from origination to closing.
Even within these three categories, it’s important to know that not all lenders have access to all of the same products and programs or have different policies that prohibit them from doing things that another lender could do for you as a borrower. For example, when you’re buying your first home in Minnesota, there are a large number of first time home buyer programs and down payment assistance programs. Not all lenders are signed up with Minnesota Housing, or other first time home buyer programs that may significantly benefit you. Oftentimes lenders who don’t have access to these programs will attempt to sell against them as a result. Even mortgage lenders who do have access to them may do the same because the loans are more challenging for the originator.
I highly encourage you to do your research; know you’re working with someone who has experience, a vast array of product availability and if you’re a first time home buyer, ask about first time home buyer program availability. If you are a first time home buyer in Minnesota, you should gather as much information as you can before selecting a loan program. We hold a free monthly first time home buyer seminar in our Burnsville office location each month. Our next first time home buyer seminar is scheduled for Thursday, October 20th. Register to attend now.
Cornerstone Mortgage Company is a full-service national correspondent mortgage company. We offer FHA, VA, Conventional, Rural Development, and a number of First Time Home Buyer Programs. We Originate, Process, Underwrite and Close and Fund our loans from our local office in Burnsville, MN.
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