Banks and mortgage bankers. This is a great option if you prefer to have all of your financial accounts in one place; however, it may take longer to close “ideal” types of mortgage lenders.
In my experience, you should be less concerned about which company you are initially getting the mortgage through and more concerned about the rate and terms they give you.
There are four main types of mortgage companies. Each type of lender comes with its own advantages and downsides, and the one that will work best for your case depends on your specific situation.
Today, I will lay out the main types of mortgage lenders and give you a hint on what to think and do with each.
Bank (Bankers) Types of Mortgage Lenders
Bankers are a great type of mortgage lender if you prefer to have all of your financial accounts in one place. Also, for many people, their local bank is the first and (possibly) only financial institution they will ever do business with.
Banks get their money from investors and their own customers. However, it may take longer to close your loan. Additionally, they may not offer government-backed loans (for example, FHA, VA, or USDA home loans).
Nevertheless, banks are the most common types of mortgage lenders, of all financial institutions.
If you’ve been wondering which mortgage lender is the easiest – banks pretty easily fill in the blank.
Credit Unions Types of Lenders
Credit unions are very similar to banks. They may have lower costs and interest rates, but like banks, they may take longer to close the deal.
They also may not offer government-backed loans, but they usually offer loans only to their members. And credit unions are owned by their account holders, known as members.
This means that credit unions usually require membership and get funds from their members.
Similar to their bank counterparts, credit unions offer a range of services to their members such as depository accounts for checking, savings, and retirement.
Mortgage Lenders (Companies) Vs. Mortgage Brokers
Another suitable answer on which mortgage lender is the easiest is mortgage lenders. Unlike banks and credit unions, which offer a variety of financial services, mortgage lenders exist for the sole purpose of real estate loans.
Unlike banks and credit unions, most mortgage lenders can take care of the entire process “in–house” which shortens the time frame involved with obtaining a mortgage.
And what is a lender? Or a mortgage lender and borrower. It is a financial institution, similar to a bank, that originates and funds loans in its own name.
Mortgage lenders exist for the sole purpose of making loans against real estate.
Most mortgage lenders do not service, or “keep”, their loans. Instead, lenders sell their loans to banks or servicing companies that then collect payments on a monthly basis.
Mortgage lenders get their money from banks. This makes them something of investors.
Mortgage Brokers Do Not Lend Money Directly
Mortgage brokers, on the other hand, do not lend money directly. They have access to many different lenders and loan programs, but they do not have as much control over the speed of loan approval (as a bank or mortgage lender has).
A mortgage broker is essentially a “middleman” between the homeowner and bank. They do not lend money directly.
Homebuyers with special income types, lower credit rates, or those that are looking for a unique property, might inquire at a broker first.
Or…
If your home bank or credit union can’t approve you, your next step is to talk to mortgage companies and brokers.
Lenders Particularly Suited For Large Loans
Although it might depend on where you are located, your income, the risk profile, and the loan amount, the general rule is that banks are the best mortgage lenders (BoA, Wells Fargo, Quicken, etc…), especially for refinancing, and small local banks for purchases.
Smaller banks tend to be easier to work with because there is personal accountability. If you are stuck, you can always just walk into the bank and talk to someone.
They deal with issues quickly and efficiently, and you are usually working on tight timelines. Getting caught up in bureaucratic hell isn’t what you want in that situation.
Bigger banks do tend to have slightly better rates though, hence the reason they get used for refinancing.
Additional Tip
If you have an established relationship with a bank or credit union, try to go have a conversation with a loan officer there first.
It’s not that you should go talk to them automatically, it’s that in conversation with them, you may discover some sticking point or detail that you left out of your post that turns out to be important.
And of course, if things go well then you may leave with one pre-approval in your pocket as a fall-back.
Following that, if nothing comes up that’s a killer, use their knowledge to check out what’s available for you and find the best deal.
With the vast number of mortgage lenders that sell servicing rights for some or all of their mortgages, it’s hard to predict whether signing with some company will result in them actually servicing your mortgage.
If the sale goes through just fine, any problems with the remainder of the life of the mortgage will be with the servicing company.
