In Denver should you go Online, Use a Broker, or talk to a local Banker? What’s your best bet?
Start shopping for a home these days anywhere in Denver and unless you are fortunate enough to be paying cash, you are not going to be going far unless you are already pre-approved for a home loan. But where to start? Do you try out one of those nationally advertised online or 800 number centers? What about a local broker or the broker the Realtor suggested? Then again there’s the local bank, what do they have and how does that differ from the first two? As usual, there is not one right answer for everyone. Considering flexibility, convenience, pricing, and service let’s look at the pros and cons of each.
Going online may seem the simplest one to start. They are usually huge call centers, open seven days a week, and offer the convenience of extended hours and computer enhanced processing. Upfront pricing, rates and terms are usually pretty average and comparable to a broker. Most will be a middle man for your loan. This means, they will help set up the initial loan application through underwriting and loan funding but will be selling the loan almost immediately to another corporation. They also may or may not have the availability of “non-conforming loans.” So if your situation is a little outside of the standard “cookie cutter” loan, these type of companies may have difficulty in actually getting your loan approved. Even if the initial response is approved. Remember, all approvals are subject to verification of the information you provided and review by an actual underwriter to make certain it meets their criteria. Generally, consider this option if convenience of off hours is your biggest concern.
Local Brokers are mortgage companies that do lending through a variety of banks and other financial institutions that offer home loans. Just like the online option, they will be selling your mortgage to another company immediately upon funding. Fees, rates and terms can vary widely from broker to broker. The lenders that they place completed loans with also are different with each broker. Due to their access to many different lenders (for some but not all brokers,) they can usually place your loan with the lender who specializes in the type of loan and risk that your mortgage represents. If you need flexibility with unusual income verification, or need to use a down payment assistance program and/or have a very tight timeline to close on your loan, brokers are often your best choice.
Many banks have come a long way in their mortgage lending in the last few years. Some, unfortunately, have not. Find out if the bank you are considering does a considerable amount of mortgages and has a person you can work with who only does mortgages. Generally, banks will have lower fees and better rates and terms, if you qualify for their loan. Almost all will offer FHA and VA loans as well as conventional mortgages. Some even specialize in loan types not typically offered by online or brokers. If working directly with the lender is what you are looking most for, a bank may very well be your best bet.
Where to begin deciding for yourself? A mortgage usually lasts seven to eight years and takes thirty-five percent of the household income for that time period, so take some time and shop around. Don’t get talked into your first proposal. Get a free credit FICO score, call around to a least one lender from each of the categories and give them a basic outline of your situation. Example: this is my income per year, I am W-2 employee with % is commission and/or bonus and I have been at my same job for so many years. Using this FICO score, if I put down X amount of money on this amount of house what type of loan can you offer me? Get fees, rate and terms available that day. If they won’t give you the information you want without running your credit, hang up and call someone else. Compare the offers and who just overall did you seem to like best. (Yes, that is important.) Once you have done your homework, make certain you check out their company and them, go ahead and make an appointment to get with them and get your pre-approval done. Then go get your house.
About the author: Marietta Companie lives and works in Denver, Colorado with her husband, children and three grandchildren. She is actively involved in mentoring and educating new and transitioning home buyers in the Rocky Mountain Area. She is a Mortgage Loan Officer and can be reached at Marietta@desertmountainfi.com or on Facebook @MariettaCompanieMortgageLoanOriginator.
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