Since most people use some form of financing, primarily a mortgage, for a significant part of their financing, to purchase a home, doesn’t it make sense for them to know in advance their options and alternatives, and potential sources, to do so? While there are many types of mortgages, generally classified as conventional or adjustable, there are also many options as to where you can get the financing you need. The main options are to use a broker, banker or seller financing. With that in mind, this article will briefly attempt to consider, examine, review and discuss how they work etc.
1. Mortgage Broker: A mortgage broker operates similarly to any other type of broker! He identifies and scores prospective clients and searches for a lender that best meets the specific needs of the homebuyer, taking into account factors such as interest rates, duration, terms, down payment, and who will benefit from this specific individual in dealing with (and, of course, qualifications). This professional does not personally finance the financing, but rather serves as a conduit to bring the parties together to achieve the best goal. Those who don’t automatically qualify could easily find this their best path, because the broker can shop around and find a suitable lender!
2. mortgage banker: Unlike a broker, a mortgage banker originates the loan and provides the funds for the transaction. Sometimes they can keep the loan for an extended period, while other times they can quickly sell the loan to others for repayment. These lenders are considered primary because they provide the money, rather than find others, to do it. Obviously, this can be advantageous for some (usually the most qualified), while less so for others!
3. Seller Financing: In some cases, the seller of a property may be willing to (in order to speed up and simplify a transaction) or prefer to self-finance this financing. Sometimes this is for the full amount, while other times it becomes a secondary form of funds, to help a qualified buyer in terms of managing a significant down payment. Much of this depends on the property market in general. Obviously, in most cases, we see more of this, when there are buyers, than a, sellers market.
A smart, qualified, potential homebuyer knows what is available and considers what might best serve their interests. Since, for most, the equity in your home represents your single largest financial asset, doesn’t that make sense?