A mortgage company is a company that loans money to borrowers who are looking to buy, build or renovate their home. You can get a loan from a large bank, local credit union or specialized mortgage lender. Mortgage companies come in different forms but there is one common theme between all of them: when they lend you money, they expect it to be repaid in full plus interest according to the agreed-upon terms.
Technically, you don’t have to use a mortgage company to buy or renovate your home. There are unique circumstances where you don’t need to use traditional mortgage loan servicing companies such as all-cash buyers. However, most people use mortgage companies to purchase a home. There are many benefits of using a mortgage provider:
The most common types of mortgage loans include conventional fixed-rate mortgages, conventional adjustable-rate mortgages (ARM) overnment-backed loans and jumbo loans . One major benefit of using a mortgage provider is having the ability to discuss different loan terms and options. Government-backed loans are insured by government agencies such as Federal Housing Administration (FHA) loans and Veterans Affair (VA) loans. Jumbo loans are an option for borrowers looking to purchase a more expensive home.
Yes, it can be beneficial to consider contacting home mortgage companies especially if you prefer hands-on support to help you find the right deal. Local mortgage companies have greater insight and a wealth of knowledge about the value of properties in the area. They also have a network of real estate agents, contractors and real estate attorneys that can support you during the homebuying process. If you want to work face-to-face with an expert who has in-depth knowledge of the local market, consider reaching out to a large bank, financial institution or national mortgage company with a local footprint.
Mortgages can be acquired online or by phone without visiting a physical location. The biggest advantage is the convenience of comparing multiple online lenders from the comfort of your own home. Many major mortgage companies now offer the ability to initiate the preapproval process online without visiting a physical location. This can be a time-saver for future homebuyers because some local mortgage providers offer online approvals and digital closings in addition to physical branches to form an in-person relationship.
Before you apply for a mortgage loan, you will need to provide lenders with paperwork to verify how much money you make, debt obligations, assets and other documents. Depending on your financial situation and the mortgage company, you will need to provide the following documents:
The mortgage preapproval process is relatively quick and could take as little as a few minutes to a few days depending on the lender. A basic preapproval letter can take anywhere from 3-10 minutes. A full-scale preapproval will require a credit check, verification of financial documents and additional documentation. On average, a full-scale preapproval can take 7-10 business days. Depending on the lender, most preapprovals are usually valid for 90 days.
You may be surprised to know that most mortgage companies sell your mortgage to investors. This is referred to as a service transfer. The customer is typically notified 30-60 days prior with details and instructions for payments. The main reason why mortgage companies sell your loan is to free up their credit and get a surplus of cash back right away to lend money to new borrowers. Mortgage companies don't have the capacity to hold mortgages for 15-30 years, so selling your loan frees up their resources.
Yes, you can switch mortgage companies by refinancing your loan. When you refinance your home, you do not have to refinance with your existing mortgage provider. This is a unique transaction and can be executed with a new mortgage company. Refinancing can possibly reduce your monthly payments and lower your interest rates. Note: There are potential cons such as higher costs and delayed closing.
Buying a home can be both an exciting and time-consuming process. It's important to perform your due diligence by shopping around for mortgage firms and securing favorable terms/rates. Partnering with a reputable mortgage provider can make it easier to build a more personal relationship with your lender and speed up your path to homeownership.
