There are three different financial institutions that make mortgage loans: direct lenders, mortgage brokers, and correspondent mortgage lenders. All three can help you get a new mortgage, but how do they differ, and why does a correspondent lender excel over the other two?
Direct Lenders are typically the “too-big-to-fail” institutions that handle your checking and savings accounts. They have retail mortgage bankers on site in bank branches (or call centers) and offer a limited selection of mortgage products based on the market segment the bank wants to target.
Many people often choose these banks assuming that the process will be easier because the bank handles their day to day finances. While this can sometimes be true, the big banks don’t always have the most streamlined process for closing mortgages. The mortgage market is only a small piece of their business and revenue model, and they do not always invest in the technology and personnel to process these mortgages efficiently.
Mortgage Brokers are normally smaller shops that typically have less than 10 employees. These brokers work directly with investors to process, underwrite, close, and fund their mortgage loans. These companies are able to offer a wider variety of products than a direct lender because they aren’t limited to one bank to approve loans. They can work with as many as banks and investors as they are able.
However, they are also able to widely vary their fees according to what they think they can get from you. So, it’s important to read the Loan Estimate they provide and compare it with other lenders to be sure you’re getting a good deal.
One disadvantage of working with a broker is that they do not control the process from start to finish and they have very little say in the final approval decision. Because brokers work directly with the investor, you are at the mercy of that particular investor’s processes, customer service, and approval decisions. That can be a good thing or a bad thing, depending on where the broker places your loan.
BrandMortgage is a Correspondent Mortgage Lender, and a correspondent lender is best described as a blend of a direct lender and a mortgage broker. We truly have the best of both worlds. Correspondents use their own money to fund mortgages at the closing table and have their own staff to originate, process, underwrite, fund, and quality review each loan. Additionally, correspondent mortgage lenders are not limited to one investor. BrandMortgage has over 200 loan products and works with 20+ investors to find the right loan for you.
We are able to shop rates with each of those investors and find the best price and loan for your specific scenario. In addition to great pricing, the biggest advantage for a correspondent mortgage lender is the ability to control the entire approval process from start to finish. Our underwriters make the final decision on loan approvals without interference from outside underwriters and can issue exceptions within minutes for issues that arise within the approval process.
If you are in market to purchase a new home or refinance your existing home, call me today at 912-771-2115 and Apply Online to get started with the Best Brand in Mortgage!