Should Omaha Buyers Work with a Mortgage Lender or a Bank?

Finding a mortgage loan to purchase an Omaha home is no cut-and-dry, easy-peasy task. There is plenty to consider before committing yourself to several years of making payments. One of the biggest decisions is what type of loan to choose and right behind that choice is what lender you will work with. 

When it comes to mortgage lenders they mostly fall into two categories: retail bank lenders and mortgage lenders which is an often used blanket term to describe a mortgage loan specialist company. These companies can work on a local, national, or online level. There are more and more mortgages being conducted online currently. 

Why is the lender you choose important? Because it can make a significant difference in several aspects of your mortgage loan from the interest rate, to the payment structure, to the level of customer service you receive. Read on to find out more information about working with each type of lender to help you determine what might be best for your Omaha home purchase. 

The Difference Between Banks and Mortgage Lenders

While banks could be technically classified as mortgage lenders a mortgage lender cannot be classified as a bank. It's like the "all rectangles are squares" thing. 

What is a Mortgage Lender?

A mortgage lender can also be called a mortgage company and they deal only with lending out mortgage loans. There are some lenders that might also offer auto loans, personal loans, or student loans, but they do not offer other financial services. 

The primary focus of a mortgage lender is home loans. This can be beneficial in some aspects but can also have some drawbacks. Lenders will often have more mortgage products to choose from and might have more lenient qualification terms. A lender is more likely to have a streamlined loan process and is often able to process loans in a shorter timeframe. 

However, they are often more corporate than personal and when you need help with your loan it could be difficult to find assistance from a person. You may also wonder who services your loan and other aspects. 

Banks

A bank is just that. A financial institution that offers several aspects of daily financial needs on both a personal and business level. Some banks, not all, offer loan services and one common loan service is a mortgage loan. Some banks may offer a loan division through a sister company or owned subsidiary. 

A majority of banks are what are considered direct lenders. This means that the mortgage loan is originated at the bank as well as underwritten. Some banks are portfolio lenders, these banks keep ownership of the mortgage loan and do not sell it on a secondary market. Some banks however will sell the loan shortly after originating/creating it. 

Banks also come with their pluses and minuses for using their loan services. For example, if you choose the bank you currently have a checking account with to take out your mortgage loan they may offer easier payment and a discount rate. However, banks often come with a higher interest rate so this rate may still be higher than choosing a mortgage lender. 

Banks also have stricter qualifying terms for a loan as compared to lenders. A bank also often comes with a more scrutinous underwriting process. But when you do qualify for a loan at a bank you can feel more confident that your loan was not given in haste. 

How to Choose the Best Mortgage for You

How does an Omaha home buyer know what is the best loan to choose? And what is the best lender? Making sure your financial goals and needs are being addressed is the main focus of what mortgage is best for you. Make sure you are well aware of all of the loan terms. Carefully read through your paperwork. If there is something that is not quite clear be sure to ask plenty of questions. A great way to get honest answers is to ask more than one real estate professional about their opinion. Ask the lender, ask your realtor, and consider talking things over with a real estate lawyer or financial advisor to make sure you are making your next best step in an Omaha home purchase. 

Borrowers are allowed to shop for more than one loan so go ahead and check out what different lenders have to offer. While you are in the application process or just merely talking over possibilities pay attention to the customer service and level of care and listening the lender provides. This tells a lot about what to expect when taking out a loan. A great lender is not difficult to work with, not impatient, not intimidating. It also won't feel like you are dealing with a used car salesman who is desperate to make a sale. 

If you are not sure of what lenders to check out try your local bank and maybe ask your trusted real estate agent about a handful of names of lenders they have worked with in the past who have helped their clients. 

For more information on the home buying process and Omaha real estate please contact me any time.