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Home Loan Comparison: Bank vs Mortgage Broker vs Mortgage BankSubmitted by Sound Foundation Wealth Advisors on March 4th, 2019
If you Google the word Hybrid, some of the top matches include: SUVs, cars, animals, weeds, and even mattresses. How about this, have you heard of a Hybrid lender?
Chances are you have but just didn’t realize it. Let’s start with the definition of hybrid: a thing made by combining two different elements; a mixture.
When you think of lending, what two different sources do you think of first? Maybe Banks and Mortgage Brokers?
How are the two of these different? What are their pros and cons?
For starters, a Bank represents strength. As an institution with its own money, it controls the transactions in which it engages. Sounds great. However, the walls that represent that internal strength of independence are also restrictive since they are only able to offer loan products that sit within those same walls. If a special need is required for a loan, a particular bank may not be able to offer that element.
How is this remedied? Enter the Mortgage Broker. A mortgage broker has the flexibility to shop for a consumer across multiple product offerings available in the lending arena. This allows for the ultimate range of options that can help a consumer find the perfect product made for them. Alas this can have its shortcomings as well. First, not having the independent presence of the banks, the broker doesn’t have the same control over the transaction that a bank has. The broker is dependent on its wholesale partner to underwrite, approve, and fund its mortgage loans. If one option doesn’t work, the loan would need to be packaged again and sent to another wholesale lending partner for review again.
This may cause pause for selecting either a bank or a mortgage broker to satisfy your home lending needs. What if I told you that you can have both? It would seem to be the perfect fit.
Enter the Mortgage Bank. Much like a typical depository bank that does mortgages and controls the transaction, a Mortgage Bank also controls the transaction. A mortgage bank will underwrite, approve, and fund its loans within its company divisions. But where this gets even better is that like a broker it has multiple offerings to provide and meet its clients’ specific needs. Because every client has a unique scenario multiple loan options must be available. A Mortgage Bank has access to these different options through the investors it brings into its lending platform. If one program doesn’t work, the Mortgage Banker needs only to look at other offerings available to them, avoiding repackaging the loan and starting over from square one.
NMLS ID 107906
Fairway Independent Mortgage Corporation NMLS #2289
4020 Lake Washington Blvd NE Suite 202 Kirkland, WA 98033
Copyright©2019 Fairway Independent Mortgage Corporation. NMLS#2289. 4750 S. Biltmore Lane, Madison, WI 53718, 1-877-699-0353. All rights reserved. This is not an offer to enter into an agreement. Not all customers will qualify. Information, rates and programs are subject to change without notice. All products are subject to credit and property approval. Other restrictions and limitations may apply. Equal Housing Lender.
AZ License # 0919667 Licensed by the Department of Business Oversight under the California Financing Law. Loans made or arranged pursuant to a California Financing Law License. CA-DBO107906