Since most people use some kind of financing, primarily a mortgage, for a large part of their financing, to purchase a home, doesn’t it make sense, for them, to know in advance their options and alternatives, and the possible sources to do so? While there are many types of mortgages, which are generally categorized as either conventional or adjustable, there are also many choices, as to where one can secure and what financing is needed and necessary. The main options, however, are to use broker, bank or seller financing. With that in mind, this article will attempt to, briefly, look at, examine, review, discuss, and so on how these work.
1. Real Estate Broker: A mortgage broker works in a similar way as any other type of broker! Identifies and qualifies potential clients and seeks a financier that best meets the specific needs of a homebuyer, taking into account factors such as interest rates, term, terms, down payment, and who that particular individual will do. Benefit from dealing (and of course qualifications). This professional does not, personally, fund the financing, but rather serves as a conduit to bring the parties together for the best goal. Those who may not automatically qualify, may find, THIS, is their best course, because the broker is able to shop around, and find the right lender!
2. Mortgage banker: Unlike a broker, a mortgage banker originates the loan and provides financing for the transaction. Sometimes, they may hold the loan, for a long time, while others may quickly sell the loan to others in order to provide the service to them. These lenders are essential because they provide funds, rather than finding others to do so. Obviously, this may work for some (usually, the most qualified), while, less so, for others!
3. Seller financing: In some cases, the seller of the property may either be willing (in order to speed up and simplify the transaction), or prefer to self-finance this financing. Sometimes, this is for the full amount, while, at other times, it becomes a secondary form of funds, in order to assist the otherwise qualified purchaser in terms of dealing with a large down payment. Much of this depends on the real estate market in general. Obviously, in most cases, we see more of this, when there are buyers, than we do Sellers market.
A wise, qualified and prospective home buyer knows what is available and considers what is best in their interests. Since, for most of them, the value of their home represents their single largest financial asset, wouldn’t that make sense?