Broker V Bank
Mortgage lingo can intimidate people. There is so much jargon–APR, loan estimate, DTI, discount points–that it seems like a graduate course in finance. Adding to that are multiple places to get a mortgage. You can use a mortgage broker, a mortgage banker, a third-party lender, either wholesale or retail, or a bank. Where to start? Which is better?
Wholesale Lender V Retail Lender
Let’s start with wholesale lender versus retail lender. A wholesale lender does not work with you, the client or customer. Wholesale lenders need a partner, like a credit union or a mortgage broker to sell mortgages. Banks are generally retail lenders, working directly with consumers to sell mortgages. In most cases, neither the wholesale lender or the bank will collect your mortgage payment. In most cases, there is yet another company running that end of the business.
Mortgage Broker V Mortgage Banker
Mortgage broker – is an independent, self-employed business owner offering wholesale, and sometimes, both wholesale and retail mortgage products. A broker is offering the chance to shop multiple mortgage products to find the best one for your financial picture.
Mortgage banker – is a retail lender, lending money from one bank or business for you to get a loan.
No matter where you get your loan, you will have to provide the same financial documents, the same credit reports and other terms for the lender to be able to sell your loan to Fannie Mae or Freddie Mac. Loans that meet these guidelines make up over 80 percent of the US mortgage market and are called “conforming loans.”
What is Carolina Home Mortgage?
Carolina Home Mortgage is a mortgage broker. We don’t work for a lender because we are independently owned and operated. In our case, we are a small family business. We work for you, and once we understand your financial situation we can choose which lender or bank to use and will navigate your loan to closing. We even direct you to another lender if that is best for you.
As noted above, most clients do not have a wealth of knowledge when it comes to finance, so it can be best to work with someone that knows the industry inside and out.