The home mortgage market is more complex then ever! Way over-the-top governmental regulations and disclosures are causing great confusion and anxiety to borrowers wanting to procure a mortgage loan. How to originate the loan? Who to trust with the most precious details in your life? Which is better, banks, mortgage banks, online sources, credit unions, or mortgage brokers? Which is the most user-friendly? All are legitimate questions and concerns. Let’s examine each mortgage option to help you make an educated decision.

Local banks. Most banks now have mortgage departments. They build off existing relationships, which is a plus to some. Since the banks actually lend the money, the bank makes it own decisions. They are, however, conservative and limited in their pricing and loan programs. If the borrower has a significant history, for example CDs and checking and saving accounts, the bank will often look kindly on the loan request.

Mortgage banks. Mortgage bankers are not the same as banks. They are regulated by different industries. These companies usually represent only one lender, underwriting, and pricing company.

Online mortgages. These have become known to all of us through massive advertising, and therein lies the good and the bad news. Low interest rates are luring, but can change drastically when your loan application has been evaluated. Be cautiously thorough when contacting this often appealing and glamorous-sounding method of obtaining a mortgage.

Credit Unions. Credit unions are specifically chartered to benefit their members. They are usually customer-oriented and offer a variety of loan products. They can offer good interest rates to their qualified members. Another feature is that the loan often remains with the credit union for life, rather than being sold to several different lenders through the years.

Mortgage brokers. Mortgage brokers are basically middlemen between the borrower and the lender. They have access to and work with a wide variety of lenders to find the right loan, at the right price. They do not lend money directly. They shop for you and deal directly with the lender on your behalf. Mortgage brokers must be licensed federally and by the state.

No matter which professional you choose to originate your loan, certain questions must answered, requirements must be met, and procedures must be followed. The following, I believe, are important factors that should be settled to your satisfaction.

1. Comparison: always compare different types of lenders for their procedures, loan products, rates, closing costs, and reputation.

2. Availability: for phone visits and face-to-face meetings with your contact person when YOU need questions answered or anxieties put to rest.

3. Lock policy: when will your loan interest rate be locked in? Is your rate locked when the rate is right or only after you have been approved?

4. Time: how quickly can your loan be approved and closed?

My final offering is a quote from Bob Walters, chief economist for an online mortgage lender “People say, ‘How do I know if I’m talking to a good mortgage representative?’ I tell them it’s the one who asks the most questions. Someone who just quotes you rates, well, you might as well be buying gasoline.”

Jim Gay was a real-estate broker for 20 years and has been a financial consultant to Fortune 500 companies. He is currently a broker/owner of The Mortgage Place (986-9080) and can be reached at


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