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Mortgage – Bank vs. Private Lender

Author: Vance Long
by Vance Long
Posted: Dec 22, 2017

When it comes to buying a house, one of the most critical factors is arranging the financing for the deal. Your Irvine home loans can be funded by the banks or alternatively, you can go the private lenders route. Making the right financing decision is crucial as you will be dealing with the mortgage for a significant portion of your future life.

Following is a take on the two options:

Bank mortgage – Traditionally, property buyers are used to heading to the commercial banks for loans. However, the banks are bound by highly stringent standards and unyielding qualifications. For instance, they can provide financing only when the applicant has a high credit score and can provide adequate down payment. Home buyers who fail to meet the limitations are summarily precluded from obtaining a bank mortgage.

Even if the loan applicant manages to fulfill the requirements, banks normally provide access to a limited number of loan products. The loan approval process is also quite protracted and applicants cannot expect to get the loan processed quickly.

Moreover, loan officers at banks are only registered under a national system and no legally mandated licensing or training is required.

Private finance – Private mortgage lenders have emerged as a viable alternative to regular financial institutions. They provide more flexible loan programs to meet the needs of a wide array of loan applicants with sticky situations. For instance, they will consider home buyers even if they come with a less than ideal credit history and even provide variable payment plan options to accommodate those who cannot foot the customary 20% down payment.

Compared to the big banks, private lenders provide access to a more varied range of loan products including FHA home loans, VA loans, jumbo loans, specialty loans, etc.

Mortgage loan officers are held to a higher standard and must be duly licensed apart from the registration required by banks or other depository institutions. This means that they are better equipped to assist prospective home buyers in navigating the daunting mortgage process.

In fact, private loan officers have a more personalized approach – they will recommend the most suitable home loans depending on the applicant’s unique circumstances and also provide valuable assistance in evaluating the various loan options. They will willingly address any issues that might arise during the mortgage application process. The loan officers even work with the underwriters which ensures that the loan applications are processed pretty quickly, making private lenders a swift finance solution.

Therefore, it makes sense to explore all options before rushing to sign onto a loan. Interview various loan officers in both banks and private lending firms to find out the different loan options available to you along with the related interest rates, fees and other closing costs. Get good faith estimates from all sources and compare them as well the level of service extended by them to make an informed decision.

About the Author

The author is an experienced mortgage officer tirelessly working in this industry for years. He considered giving some tips to choose one of the best mortgage lenders through this article.

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Author: Vance Long

Vance Long

Member since: Jun 28, 2017
Published articles: 3

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