People buy homes and real estate investments through me all the time, and a bit more than 80% of my clients need or choose to secure mortgages. When they’re looking to spend hundreds of thousands of dollars (and at times even more), it’s hard for most people to find that kind of whoop-out money to pay cash.
That means that most buyers are in the position to have to ask someone to give them a lot of money. We don’t think of it that way, but that’s what it is. You walk up to a stranger and you ask for a great deal of money so that you can buy something you don’t right now have the money to buy. In that situation, choosing that person carefully is very important.
So who lends that kind of money? You have at least two sources, maybe three.
Firstly, the family or very good friend option. You may have a rich Uncle Jim. If you do, that’s wonderful, I hope. Understand, of course, that I’m going to need to talk with him to set this whole thing up, because the real estate broker representing the seller of your next home will want to know that this guy is real. If he is, we can make this happen. No rules. The money is either there or not. He’s either willing to give it to you or not. You either agree to repay him or not, and on what terms is for you guys to discuss. I’m happy to talk everyone through it.
If you don’t have that option, you have two others -- mortgage brokers and mortgage bankers. There’s a difference. In one way. Then again maybe the difference isn’t so important.
Mortgage bankers work for the lender – not for you. The lender may be a huge bank, but as easily a smaller local credit union. The point is, that person behind the desk is not working for you, but for the company that hired him. He’s an employee. He gets paid by the company for improving its bottom line by selling you a mortgage.
That sounds bad, but keep in mind that that person’s paycheck doesn’t land on that desk until you buy that loan. That person has a real interest in doing right by you, by finding the right loan in the right amount, and on terms that make sense for your financial situation. If he’s a good person who’s good at his job, you’ll get a good mortgage.
Some of those banks are able to offer wonderful opportunities for specific groups of people. Some have very beneficial features in loans to military people, or union members, or first-time buyers, and especially to people who have a lot of money invested in that particular bank. The rates are competitive, and they get the job done. It’s well worth the look.
A mortgage broker on the other hand does not work for the lender. She works for you, and has a fiduciary duty to represent you in the greater marketplace. She’s like me in that I don’t own all the properties I show you. I’m brokering the sale for you in a transaction with a person who does own that home. The mortgage broker and her company don’t have a vault full of all that money to lend you, but negotiate with the financial institution that does have it. She has the ability to negotiate with any number of lenders in the marketplace, and is tasked with finding and negotiating for you the best mortgage out there.
That sounds wonderful. Why would you not want someone working specifically for you?
Answer: If your neighbor’s kid just graduated from somewhere and became a mortgage broker, would you run in to see him about negotiating your next multi-hundreds of thousands of dollars of debt?
The point is that these two options (I’m passing on Uncle Jim for now) are significantly structurally different, but not that much different in a very practical way. Most important is that you always hire the best person. Always work with the person who honestly and ethically wants you to come out strong and secure. Always the person who has the experience to make it happen for you, who knows what challenges need be addressed and how to deal with them. Always the person who can meet the goal.
The good news is that I know many of them. I’ve worked with them on transactions with other buyers and sellers. I know who has performed, and who hasn’t. I’ve seen the mortgages they’ve negotiated or provided. I can pass those names and all of that information on to you.
In the alternative, you can always ask your relatives if there’s a rich Uncle Jim in the family.
Call me as you need. I’m always here for you.
WK Real Estate