Mortgage Lenders | New Homes Market Center
Not all mortgage lenders are alike. If you need to purchase a home direct from the builder or seller, you can obtain financing from many different sources. Selecting your mortgage lender is one of the most important steps to ensure the loan process runs smoothly and that you walk away with the correct loan product.
Here are some different types of mortgage lenders:
Banks or Credit Unions
Your bank or credit union can be a direct source for mortgage loans or construction financing. When you walk into your local bank or credit union, they might be able to offer you some of their own mortgage products on a retail level. Remember, going directly to the bank to get financing to build a custom home or for a standard mortgage loan, does not necessarily mean you are going to get the best deal. Some banks may only be able to offer their own products, and if those loan products are not competitive, you may be paying a higher interest rate.
A mortgage broker typically works with multiple lenders and shops those lenders wholesale rates to get the best pricing for you. They act as an intermediary between you and the lender. If you require financing to build a custom home, some mortgage brokers have the capability to facilitate your construction loan and covert it to your permanent financing once your home is complete. They collect your paperwork and send it out to the lender to get approval. The lender is the one who funds the loan.
Like brokers, correspondent lenders are able to work with multiple investors who offer wholesale rates, and they search the best interest rate and product for you. Like bankers, they use their own money. They also keep your loan “in-house,” which means the company’s employees process the loan completely. If you are building a custom home, a mortgage banker may have access to construction financing in house or may broker this portion of the loan out to other construction lenders (interim lenders). The lending company has the power to underwrite the files themselves. This may be the best option if you are limited on our closing time.
Builder’s Mortgage Lenders or Brokers
If you are buying a new home direct from a production builder, than it is likely that you will not need construction financing because the builder will cover these costs while the new home is being built. However, builders may require deposits upfront for any custom built features, upgrades or options. Many production homebuilders have their own mortgage lenders. They will often make it a condition of your contract that you use their lender. Be very careful because they may offer you points upfront in order to use their lender, but once you agree to this, the interest rate or loan program might be higher than the market interest rate. A good way to make sure you are benefiting from the extra points is to write in the contract that you would like the option to use the lender of your choice. This will make the builder’s mortgage lender try to be competitive, and if they are not, you can use your own lender and still have the incentives offered in the contract.
Online Mortgage Lenders or Brokers
You will run into many online mortgage lenders who can make the process seem easy for building a custom home, but you should be on the lookout for many hidden fees. You will have minimal contact with a live loan officer and may be unknowingly working with inexperienced loan consultants. In addition, many online lenders quote false rates in order to get you in the door, and the closing costs they quote often do not include many of the required fees because they are not full service lenders. If you require construction financing to build a custom home, try to work with local lenders and loan officers that you have access to in person.
Whether you are building a custom home or purchasing direct from the builder or seller, we have assembled a team of construction lenders, mortgage bankers, mortgage brokers, and banks that can assist you with your purchase transaction. We will match you with a lender that will best fit your needs and financial goals, and our team of New Home Specialists will be there to help you each step of the way!