Las Cruces Real Estate | Banks vs Mortgage Companies
In our last video, we discussed where to begin in the homebuying process (if you missed it, check it out here). Just to refresh, the first step in the homebuying process is to find a lender so that you can get pre-qualified for a home loan. Today, we want to go into more detail about this step and discuss the difference between banks and mortgage companies.
A bank is one option when seeking out a home loan. A bank is going to be FDIC regulated and offers a wide variety of products such as checking and savings accounts, auto loans, and home loans. Since banks are federally governed, their rules and regulations for offering mortgages are often far stricter than those of a mortgage company. Despite having stricter guidelines, getting a mortgage through a bank has its perks. Often, banks will have lower fees, competitive interest rates, and will keep their own servicing and not sell the loans. It is also convenient for some to be able to bank and handle things related to their mortgage at the same place.
On the other hand, mortgage companies strictly work with mortgages. Unlike banks, mortgage companies are regulated by the state and therefore, have more flexibility in getting you approved for a home loan. This is important if you find yourself in a situation where your credit score is just a little too low or if you need assistance with a down payment. Mortgage companies will evaluate your situation and present it to a variety of different investors and companies who will then finance your loan.
All in all, we cannot stress enough, the importance of doing your research and comparing what a bank can do for you as opposed to a mortgage company. This process is definitely not a one-size-fits-all process, so it’s important to do what is best for you and your situation.
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