It is very common for homebuyers to look to their real estate agent to recommend a lender or loan officer for a mortgage. How do you choose which lender you will recommend? How will the lender help grow your business? How will the lender work with your clients to help them successfully close their loan on time? The following are two questions to consider when making your decision.
Should I choose to work with a lender or mortgage broker? A recent Inman Watt1000 study1 found that 47% of agents prefer mortgage brokers, 31% prefer bank lenders, and 22% prefer non-bank lenders.The following are the differences between lenders.
- Banks. Many financial institutions that offer banking provide other services like lending. Applying for loans from a borrower’s home bank can qualify them for perks and discounts over other lenders. Banks are known to have higher interest rates among lenders. Banks can also take longer to close because of the volume of applications they receive.
- Credit Unions. Credit unions do offer mortgages and have some of the lowest rates. This is because credit unions are non-profit organizations which do not have the pressure for higher profit margins on the loans they provide. Credit unions have requirements for membership and may limited to the number of loans available.
- “Non-bank” lenders. Non-bank lender include any mortgage lender that is not a bank or credit union. For example, these can include online lenders like Better.com and Guaranteed Rate, as well as private mortgage lenders like Quicken Loans, Rocket Mortgage, and Loan Depot.
- Mortgage Brokers. A mortgage broker acts as an intermediary between banks, mortgage lenders, and borrowers. They use their network to help borrowers find the best loan for their needs and budget. They are not actually a lender themselves.
A good rule of thumb is to have contacts that you have vetted for each type of resource. Choose those whose working style and client base is similar to your own.
What are the character traits to look for in a lender? When choosing to partner with a lender, consider the following:
- Accountability. The lender should be willing to invest time in your clients, to explain the loan process, and to help your clients understand what they can do to help ensure their loan is approved. The lender should clearly define their role and specifically outline what they will be doing to help ensure the loan closes on time.
- Communication. A good lender will communicate on a regular basis with the agent and client about the status of the loan. Make sure that the lender will communicate according to your preferences (e.g., email, text, or phone call to your home, cell, or office).
- Know their products. A knowledgeable mortgage professional knows the industry and their products well enough to explain them in layperson’s terms. This is critical when it comes to trusting your clients with the lender. The homeowner is responsible for every document they sign, and even the most consumer-friendly mortgage disclosures can be confusing at first glance. A good lender will make sure that borrowers understand what they are signing.
- Experience and Reputation. Carefully evaluate the lender’s track record, particularly what their clients say about them. Great lenders know that their biggest asset is their reputation, and each will make sure they do what it takes to take care of the customer.
- Willing to market together. There are many ways that you and the lender can work together. See how the lender works with other agents in social media, email, direct mail, and print communications. Consider sharing marketing costs, doing seminars, targeting communities with promotions, and more.
- Diversity in product offerings. The lender should have product offerings that will match the client base they serve. For example, if you have a client base that is credit worthy and lower income, you will want a lender who has products like down payment assistance (DPA). One way to find lenders who offer DPA is to contact CBC Mortgage Agency to find lenders from across the United States who offer and represent the Chenoa Fund down payment assistance.
About the Author
At CBC Mortgage Agency , we offer nationwide down payment assistance in the form of second mortgages through the Chenoa Fund program. We offer five different second mortgage products, each with their own individual underwriting requirements and guidelines, in an effort to provide options to borrowers of any income and most DTIs. Our options include products for both FHA and conventional loans; some of our products include 0% interest rates and no monthly payments.
- Click here to find an approved Chenoa Fund lender.
- Click here to become an approved a Chenoa Fund Lender
1 Inman Watt1000 Study: What real estate brokers and agents want from lenders