Some direct lenders you can choose to shop at are:
Retail banks. Loan approval is often quick, rates are usually higher than average down payment is often required. Retail banks lend their own money and set their own guidelines for approval;
Credit unions. They operate like retail banks but offer their services to their members only;
Mortgage bankers. Often affiliated with major corporations, mortgage bankers are solely in the business of selling mortgages. They set prices, process applications, fund closing costs, then sell loans to investors;
Insurance companies. Insurance companies often make large home loans. They may also allow their whole life policyholders to borrow against their policy’s cash value at a low rate.
Federal Housing administration (FHA). The FHA doesn’t lend money, it insures loans meeting specific guidelines. The FHA insures lenders up to $208,800 (as of 2000) for loans on single-family homes. Home buyers pay the premiums, some up-front and some with the mortgage payments.
Farmers Home Administration (FmHA). The FmHA helps buyers in low-population areas get home loans. It also offers loans with strict guidelines to those who can’t get a mortgage from a lender. The interest rate is based on what the buyer can afford and is guaranteed up to 90% of the overall loan amount.
Veterans Administration (VA). The VA guarantees loans to veterans of combat and some noncombat service. Veterans must have been honorably discharged to be eligible. If the buyer fails to repay the loan, the VA makes up some or all of the payment to the lender.
State programs. Many states offers special assistance for low income and first time buyers. The Department of Housing and Urban Development (HUD) provides support for low income housing and can guide you to special programs in your area. Call 800-245-2691 or contact one of this real estate:and to find a program in your area.
There has been an explosion of mortgage services on the Internet. Fees may be lower than non-Internet deals, but quality of service remains an issue.
You can shop for a mortgage with direct lenders, who:
- Have money to lend;
- Make the final decision on your application;
- Have a limited number of in-house loans available.
Or you can shop for a mortgage brokers who:
- Are intermediaries that choose among many lenders;
- Have many lenders from which to choose;
- Are paid a fee based on the amount you borrow.