If you’re like most homeowners, you’re excited about today’s extremely low mortgage rates and the opportunities they present to buy or refinance a home. You probably have lots of questions, but aren’t sure who to ask. You may even be confused by the various titles in the mortgage industry, wondering whether you should turn to a mortgage broker or a mortgage banker (aka loan officer).
At Resource Financial Services, we are always happy to answer any questions you have. We’ve answered some of the questions we hear most frequently to help you understand the mortgage process and improve your overall experience.
What’s the difference between a mortgage broker and a mortgage banker?
The biggest difference and the easiest to understand is that mortgage brokers don’t actually make loans. They look for the best lender for you, simply acting as your agent.
Mortgage bankers on the other hand allow you to deal directly with the decision maker who can skip layers of bureaucracy to make your loan happen. A local mortgage banker who does everything in-house – from application, processing and underwriting to closing – gives you the best experience with a smooth, hassle-free process and a quicker closing.
What does a mortgage banker do?
As an independent loan originator, mortgage bankers provide more services to the borrower, including things like advising the client about the best loans available for their purposes. They will gather documents throughout the process, order the appraisal and communicate directly with the underwriter to make sure the loan gets approved.
What happens if I go to a big bank instead?
You may pay a higher rate. Independent mortgage bankers have more loan options and sources available to them than the big banks and they have more flexibility so they are able to offer lower rates.
What factors determine who gets a loan?
Many factors are considered. Debt-to-income ratio (DTI) is the most important thing. This is calculated by taking the total house payment (principal and interest) and interest, taxes, insurance and mortgage insurance and expressing that sum as a percentage of the gross monthly income.
For a conventional loan 50% is the maximum value but some loan programs allow a higher DTI. Loan officers also look at the stability of the income, how long the person has been employed in the same line of work and other financial assets.
What can I do to improve my chances of getting a loan?
It’s best to get your finances in order before applying for a loan. If you have any credit issues, get them resolved before applying. For instance – credit card balances over 30% of a credit limit will reduce your credit score. Deal with tax liens, judgments or other public record items in advance. A good mortgage banker can help you with this.
How can I tell if it’s worth it to refinance?
Talk with an experienced mortgage banker who can review your current mortgage and do the math for you. Your mortgage banker will factor in how long it will take to recoup the non-recurring closing costs and what your net savings would be.
For more answers, talk with a Resource Financial Services mortgage banker at 877.797.4545 to discuss your mortgage options and your financial goals. We’re excited to help you find your home, find your loan and get cash back. Start searching for the home of your dreams online at rfsmortgage.com. Let us walk you through the process and welcome you home to a better mortgage.