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It’s All About Approval

These days, a buyer’s biggest concern shouldn’t be so much about finding the lowest interest rate, but finding a lender who will approve their application.  There are three basic types of mortgage providers, each regulated by a different agency, and following different disclosure laws.

Banks: generally employ their own underwriters and provide loans with their own money.  They often have mortgage products matched to particular situations, such as manufactured homes or new construction.  Minimum credit score requirements will vary from bank to bank.

Brokers: work on a commission and make a little more than bankers, but their business is highly regulated and transparent.  They prepare your application file and present it to banks or investors.  Involving a third party can take more time, of course, and since they have higher credit score requirements and fees, don’t shop at a broker if your score is below 620.

Correspondents: draw from their own credit lines and sell your mortgage shortly before closing.  Since their ability to lend depends on their own credit, it’s possible for closing to be delayed if they are processing more loans than they have funds to cover.  That doesn’t mean you can’t still get good terms, however.

You need to assess your financial position and your needs, and speak with your real estate agent about which type of lender best suits your situation.