The vast majority of buyers finance their home purchase. 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:
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.
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.