Mortgage Brokers vs. Mortgage Bankers
What's the difference?
Benefits of Brokers: Brokers work individually with borrowers. The broker is independent and searches for a loan based on his customer’s needs, not his employer’s needs. A broker matches clients with lenders then walks the paperwork through final approval and funding. Brokers’ fees are paid by the lender, so they are of no consequence to the buyer.
Benefits of Bankers: Mortgage bankers are direct lenders; working with them eliminates the middleman. Mortgage bankers themselves approve or reject loans and may prove more expeditious. Mortgage bankers must have substantial net worth if they are to survive. Because they are competing with both other bankers and brokers, mortgage bankers offer competitive rates
Your FICO Score
FICO measures credit-worthiness. Underwriters use three credit bureaus, Equifax, Experian, and Trans Union, to determine your score in the following ways:
1. Delinquencies lower scores, and scores drop when several credit accounts are opened in a short period.
2. A long credit history is better than a new one, and too few revolving accounts makes it harder to evaluate the ability to manage credit.
3. Consumers with “maxed out” cards may have trouble making payments. Too many revolving accounts indicate over-extension.
4. Tax liens, bankruptcies, and use of consumer credit agencies can all lower a FICO score.
5. Small credit card balances and no late payments show responsibility.
What Are Points, Anyway?
A quick quiz: mortgage “points” are
a) certain charges paid to obtain a home mortgage
b) the gross profit for the originator of the loan
c) up-front mortgage interest fees to reduce the interest rate
d) each equal to 1 percent of the total loan amount
e) loan origination fees
f) charged by a lender to raise the yield on a loan when money is tight, interest rates are high, or there is a legal limit on the interest rate that can be charged on a mortgage
g) come in two varieties
h) all of the above
Loan Applications: What You Might Need
3 months’ bank statements
Copy of HUD1 Settlement Statement on recent home sale
Gift letter; donor’s bank statement; copy of gift check; copy of deposit receipt
Explanations for late payments; credit inquiries in the last 90 days; charge-offs; collections; judgments; liens l bankruptcy papers within 7 years
Copy of Social Security Card and driver’s license
Last 2 years’ W2 forms
Last 2 years’ 1040’s if self-employed; capital gains; interest income; 25% of your income is commissions/bonuses; own rental property
Y-T-D P&L Statement if self employed
Corporate or Partnership tax returns (if you own more than 25% of a business)
Copy of purchase agreement (if you have already made an offer)
Receipt for child support payments
Copy of Divorce Settlement
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Chris & Renee Chaback