Purchasing a home means making a lot of decisions and quick ones at that. One thing you’ll be tasked with deciding early on is whether or not to use a lender for your financing. To some, this may seem like a no-brainer unless you have several tens of thousands of dollars lying around to pay cash for your house.
The reality is that getting a home loan can come in a lot of different shapes, forms, and institutions. That is the reason this is such an important decision: do you borrow from a bank or a dedicated lender?
Banks vs. Lenders
To a first time homebuyer, differentiating between a bank and a lender may be difficult at first glance. In reality, the two, while similar, are not always the same and don’t necessarily offer the same services. In general, a bank is almost always a lender, but a lender is almost never a bank.
What that means is that banks that offer lending services are still banks at heart. Their primary focus is to gain customers, issue credit, safeguard client funds, invest, and generally engage in financial activities. On the other hand, a lender is dedicated to the trade of loans and specifically home mortgages.
Multiple Loan Products
Lenders have access to many different loan products for you to choose from and are competent in all of them. A lender deals with home loans on a daily basis and has a great deal of familiarity with different products, different customers, and the needs of those customers.
Additionally, lenders will go beyond their typical tool chest of loan products in order to make sure you’ve got the right loan for you and your family. This personal one-to-one approach is what really sets lenders apart from banks and helps you find the perfect product for your new home purchase.
Shopping for the Best Deal
If you take out a loan from a bank, you’re likely going to find nothing more than fixed interest rates based on what products the bank is currently offering. No matter if it’s a personal line of credit or home loan, you can’t expect to see much (if any) variance in interest rates or terms.
Lenders, with their much broader library of mortgage products, not only have different structures of loans but also have the ability to shop around on your behalf to find the best interest rates and terms to fit your budget.
As we’ve said, banks can certainly be lenders, but at what cost to you?
Generally speaking, when it comes to mortgages, banks tend to be the middleman, a third-party of sorts in the grand scheme of your loan. As a result, they pass additional charges on to you, the borrower, in order to use those lending services.
What this means is that 1) you could have probably gone straight to the source (the lender) and saved hundreds if not thousands of dollars and 2) you’ll be responsible for more money at closing such as origination fees, processing fees, and other sorts of pass-through income for the bank or the lender. All that to say, it may be wise to cut out the bank and go straight to the source of your loan.
Choose a Lender with Experience
It may seem a little daunting to pick the right lender, but regardless of where you go for your mortgage, you’ll want the best lender with the most experience in the business. Tidewater Mortgage Services, Inc has been in the mortgage lending business for over 20 years and has helped countless home buyers like yourself find the right solution. Contact us today to get started!