The difference between a bank and correspondent lender

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You are in the market, looking for a home. If you’re like most people, you have scrimped and saved up a little nest egg and are now ready. It also means you’re going to need to borrow money to get into your dream house. The loan taken for a home purchase is called a mortgage. This post is going to take a quick survey of the various ways to actually get the funding for the home loan.

Banks/Credit Unions

When getting a mortgage through a bank, the loan officer works exclusively with only their particular employer. The loan officers at a bank offer only the product line of loan types for their company, they also have only one set of guidelines from which to work. While the process is fairly standardized for securing a loan with a bank, the customer is not able to ‘shop around’. The loan officer will review your application, find a home loan from their product line that fits your qualifications and if your credit is approved, you can secure a mortgage at the rate that bank is offering. If you want to consider other options, you have to drive around and go through the entire process with a different bank again.

Online

The option of an online bank is relatively new. You may have heard their ads on radio (who do you think is paying for that?) These companies function much the same as a ‘brick and mortar’ traditional bank as I previously described.   Unlike the old style bank, the personal touch is dropped leaving you without the option of working face to face with a mortgage professional. You just get whoever is next in the sales queue to handle your personal loan. Like the bank, they are limited to quoting only one company’s product line.

Mortgage broker

A mortgage broker is somewhat independent in that they can actually shop around to various banks which is good for you. But once they find a bank they tend to lose a bit of control over the process. They send a loan to a specific bank that will underwrite, approve, and finally close the file in the bank’s name. The underwriter or closer is a key component to the loan process. They are employed by the bank, not the broker. Each bank has their own guidelines and those can be applied in a variety of ways.

Correspondent lender

Finally, there is the correspondent lender (that’s me). We work with a wide variety of banks, including big name banks like Wells Fargo or SunTrust, and also with the new e-banks like Quicken. The correspondent lender can select the bank with the most advantageous guidelines which will best fit the client. Each bank has to compete for our business in the important area of loan guidelines, process efficiency, and products and for your business in the even more important area of interest rates. As a correspondent lender, we employ our own underwriters to approve and close files. This gives us much greater control over the approval process. We shop for the best banks and the best rates for you. We handle underwriting, approving, and closing the loan before we transfer it to the bank, meaning it is all done ‘in-house’. We take the time to get to know you. This personal touch is critical to getting the best tailored loan for each unique customer.

Wrap Up

When you need a loan, you have a variety of choices in loan sources. The Correspondent Lender can offer you the most personal service, the broadest selection of products, and the greatest control over the process. Our success stems from your satisfaction. We want your referral and your repeat business and we will earn that through excellence of service and superiority of products.

Portrait of modern couple talking to manager while discussing conditions of mortgage

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