Who Are Your Allies During the Loan Application Approval Process?

Who are the players behind the loan application approval process? Are they all one in the same? Who is funding the loan? It is a misnomer amongst many consumers that ‘mortgage companies’ are financial institutions that lend their own money to fund a home loan. Alternatively, the company that a consumer will deal with may be either a mortgage broker, loan officer or a mortgage banker.

Generally, a loan officer or mortgage banker is the direct lender who provides their organizations own currency. Even though the primary mortgage market often vends the home loan to the secondary market, the direct lender or mortgage bankers will in certain cases continue to administer servicing the account.

On the other side of the loan application approval process, a mortgage broker is the ‘home loan liaison.’ The mortgage broker acts as the go between the consumer and the lending institution. A good mortgage broker will perform the grueling task of loan shopping for the consumer, In turn, the loan specialist will analyze and identify he best home financing opportunities for the borrower. A number of lenders that the broker finds for home loans do not transact business directly with the consumer or the public and are referred to as a ‘wholesale lender.’

As a mortgage banker and mortgage broker are not what in the same. The choice of employing either to process a home loan can be determined by answering the following questions:

1) Do you prefer to use a mortgage professional who can provide a variety of financing options during the loan application approval process?

2) Does it matter to you if your financing is sold-off to a secondary market?’

3) Do you require more flexibility in your home loan application approval process?

4) Would you prefer to work with the type of loan specialist who has access to the lowest interest rates, possible?

Should you answer YES to more than one of the above questions, means that a mortgage broker is the best approach for you to take while attempting to navigate through the home loan application process. If you answered NO, to most of the questions, a mortgage banker (primary market) matches your home financing style. On the other hand, if your answer is a 50-50 split, try working with both a mortgage banker and mortgage broker to gauge the difference.