Which Type of Lender is Best For You?
One of the most important aspects of a mortgage is choosing the best lender. There is no “best lender” for everyone since every file is different. It will be those unique qualities in your mortgage that will determine which lender you’re going to use.
Read on to find out more about the three potential types of lenders:
- the big banks
- credit unions
Banks are financial institutions that accept deposits, lend money and transfer funds. They are listed as public, licensed corporations and have declared earnings that are paid to stockholders.
Banks are considered to be trusted. If you decide to use a fixed-rate mortgage from a big bank, keep in mind the penalty to break the mortgage will be more significant than other lenders. If you are going with a variable rate, a big bank is best since the penalty will be smaller.
Credit unions also deposit, lend and transfer funds. However, after that, we run into some differences between the two. Credit Unions are local and community-based organizations that have a Board of Directors consisting of elected members of their community. The credit unions’ calculations for penalties are typically friendlier to the borrower and if there are credit issues, they tend to be more understanding than the big banks.
Monolines specialize in a single type of financial service, such as consumer credit, home mortgages, or a sole class of insurance. Monolines usually offer better-discounted rates, while how they calculate the penalties can be friendly to the client. They’re just not as well-known or trusted like a bank, however it should be noted the major investors in monolines are the big banks. So there is really nothing to fear.
A typical broker will have access to up to 90 lenders which means having a good mortgage broker can be extremely helpful. A great broker will turn over every stone and work with the lenders to find a solution, even if your situation is more complicated. And since a broker has a number of different lenders to choose from, they’ll understand each of the lender’s guidelines to get you the right mortgage.