Mortgage Loans

Understanding Mortgages: Where to Get a Mortgage

In the midst of one of the most uncertain real estate markets in history, it’s more important than ever to be informed. In a continuing series, we take a look at some of the most pressing questions about mortgages, refinancing, home equity, and other real estate options available to you.

(8/14/2012) Borrowers looking to find a mortgage have a number of options open to them. By exploring the avenues here, and by comparison shopping between them, potential homeowners can find the mortgage that works best for them.

The first step before finding a mortgage source, however, is deciding the type of mortgage that makes the most sense. After determining the ideal value, as well the appropriate terms that will work, the sources available are:

Mortgage Broker
One of the most helpful sources for a mortgage, particularly for first-time buyers, may be the mortgage broker. These companies and individuals work for the buyer, determining eligibility and affordability, and examining the market for the best loan at the lowest interest rates. The broker can also help with advice on completing paperwork, researching homes, and qualifying for loans. Brokers collect their fees from the lender, which may affect how much you pay at closing. But for many, it is a cost that’s well worth it.

Banks and Credit Unions
Borrowers can approach their own bank or credit union for their home loan options and opportunities. There may be less mortgage products available than in the larger market, but if the borrower has a trusted relationship with that source it may be a comforting alternative.

Online Mortgage Sites
The web has an increasing variety of sources for mortgages, which fall into three categories - direct or single lenders, auction sites, and multilender shopping site. Direct or single lenders include banks, and usually online is the start of the conversation. Full purchases must be completed via phone or in person. Auction sites collect information and send it to lenders to compete for business. Multilender sites compare current rates and interest among many lenders, and can ultimately connect borrowers with lenders. As with any online purchases, it is wise to be diligent and careful, and never provide more information than is comfortable and reasonable.

Government Loans
The two main federal programs offering loans to homebuyers are the VA loans available to military members and veterans (and their families) and FHA loans. The U.S. Department of Veterans Affairs doesn’t actually make the VA loans, but guarantees part of the loans from a private lender, helping veterans get favorable terms. FHA loans offer a low-down payment alternative to citizens and other qualified applicants, providing Federal Housing Administration backing for loans with as little as 3.5% down.