The vast majority of buyers finance their home purchase in the Bay Area. This means you will need to get a mortgage
if you want to buy a house. You have several lending options, though, and it can be a bit overwhelming trying to decide which type of lender is the best.
There is no choice that will be best for every buyer, as the choice will depend on your unique situation, the type of property you wish to buy and how the lender’s rates and terms compare with others.
The following are your options for obtaining a mortgage: in the Bay Area
Nearly 25% of all mortgages made in the U.S. originate from a mortgage broker, but this percentage has been slashed in half in the last decade. So, what is a mortgage broker exactly? A mortgage broker serves as a middle-person who brings lenders and borrowers together. Sometimes mortgage brokers are mortgage bankers, but not always.
The advantage of turning to a broker is that mortgage brokers work with many lenders, sometimes even hundreds. The loan products offered will vary by broker, however.
The fees for a mortgage broker may be paid by the buyer, lender or both. Some mortgage brokers operate as an up-front broker, which means they will directly negotiate a fee with you in exchange for finding the lowest interest rate and fees on a mortgage in the Bay Area.
Commercial Mortgage Banker
Commercial mortgage bankers work for a financial institution, and some represent more than one bank. Despite this, the loans they make are funded by the bank. Keep in mind the fees are usually non-negotiable and the loan products you can choose from will be limited to those offered by the bank.
Wells Fargo and Bank of America are examples of commercial banks that can provide a mortgage. When you turn to a bank, you can expect competitive rates and possibly an incentive or discount on your mortgage if you maintain an account at the bank.
Savings & Loan Association
A savings and loan accepts deposits from its customers into a savings or money market account and pays interest on the account. Most of these institutions are now regulated by the Department of the U.S. Treasury. Unlike a commercial bank, the primary source of business for a savings and loan association is making real estate loans, including loans for purchase, home improvement and construction.
A credit union does not pay federal taxes and has tax advantages that other lending institutions do not. A credit union is formed by individuals with a common interest, such as a religious group or state government employees. To get a mortgage from a credit union, you must meet qualifications to become a member in the Bay Area. Expect competitive interest rates and mortgage terms.
Did you know the company that handles your IRA or online savings account can also make a mortgage loan? Big-name examples include Capital One (which purchased ING Direct in 2013) and Charles Schwab. If you’re considering this option, remember that online lenders work best for borrowers with excellent credit, who know what they want.
Finally, anyone who has enough cash can give you a loan, provided they comply with regulations in terms of interest rates, charges and fees and provide disclosures required by law. No appraisal or title policy may be necessary if you go this route, but you should still get both for your protection.