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[W507]What Is Mortgage Lender

by Michael Sterios, Mic

Contrary to popular belief, a mortgage lender doesn't just give you the money for your house and that's it. They also offer a wide range of services and advice that can help you choose what package is best for you. There are even specialist lenders that deal solely with poor credit, offering a mortgage to those who'd otherwise be turned down. The main types of lenders in the UK today are:

Banks and Building Societies

Arguably the most common or popular source for homebuyers is their bank or building society. This is more down to the ease-of-use than anything else – after all, most people have loans or credit cards through their banks, and so it seems a natural choice for them to take care of your mortgage as well. However, this can limit your choice when it comes to different rates and mortgage types, so it's not always the best option.

Specialist Mortgage Lenders

One area that has really grown in the last 10-15 years is that of specialist or independent mortgage lenders. These can be online companies, or other financial institutions that now offer mortgages – for example, insurance companies now offer homebuyers the option of taking out a mortgage with them, as do estate agents.

The benefit with taking this approach is that you can find a far greater range of mortgages available to you, from buy-to-let to longer repayment times. They can also offer more flexibility when it comes to changing your mortgage throughout the repayment period, whether it's for a better rate or to accumulate all your debt with one solitary lender. The online companies can even offer cheaper rates, due to the lack of overheads involved.

Lenders for Poor Credit Cases

One of the biggest stumbling blocks for anyone looking to buy a house is poor or bad credit. Yet with the majority of the UK in debt anyway, there are now more options available to people in this situation. Look at the back of most newspapers and you'll see adverts for companies that advertise with tags such as “Poor Credit – No Problem” or similar.

Whilst these types of companies are good news for people who'd otherwise struggle to buy a house, they do have their drawbacks. The main one is that usually their rates are a lot higher than the normal outlets, sometimes astronomically so. There have also been cases where people have been thrown out of their homes for missing a single payment, so make sure you read all the small print of using this type of mortgage lender. As long as you stay with an FSA-approved lender, there shouldn't be too many problems – a quick search online will be able to tell you which companies have this accreditation, and which don't.

One thing you should keep in mind is that you should clarify every possible doubt concerning a mortgage with a lender. Since you are a consumer, you have every right to ask pertinent questions. In addition, it is up to the lender, how openly and clearly, he answers the questions. If he is interested in doing business with you, he has to answer your queries. It is a professional requirement on the part of the lender to answer the borrower's valid questions.

Now what are those pertinent questions? The trick is to know which questions to ask and which to verify for yourself. Obviously, you do not ask a lender whether they have a good reputation or if they were ever involved in any controversial transactions. The background info of a lender has to be collected by you from friends, associates, competitive lenders, and the Internet.

You could save yourself a lot of money and trouble if you ask a lender/broker these questions boldly and politely.

1- In what way the lender is unique in comparison to other lenders. In what way the services that the lender would provide, set him apart from other lenders?

2- When can you get a good faith estimate of the costs of the loan? Expect to take the good faith estimate of the costs document with you when you leave their office or within a few days of submitting the loan application. Do not agree to accept the document during closing; it will be too late then.

3- Ask the lender to explain in clear terms about all the expenses involved in closing the deal. Who is paying for all the expenses in processing the loan? If you are paying for the fees find out if there are ?junk fees? involved and if there are add on expenses. There could be many bogus fees like ?underwriting fees?, ?processing fees? or ?document preparation fee?.

If it's a broker, ask him the mark up points he has added to the loan. Will it be possible to reduce the points, say from 1% to 0.75%?

4- Can the extra, unnecessary, and bogus expenses be waived?

5- How long will it take the lender to approve and process the loan? If you want it fast, can the lender do it?

6- What are the risks involved in the different types of mortgages? Every mortgage type has some pros and cons. Let the lender explain in detail about the plusses and minuses of the loan options suitable to you.

7- Is there a prepayment penalty? If you wish to pay more than the calculated amount and pay off your loan earlier then scheduled will there be prepayment penalty?

8- Is it possible to convert loans in the middle of a term? Does the lender/broker have the facility to do so?

9- In case of any dispute between the broker and the lender, does the broker expect you to mediate? Will your presence be required?

10- Will the lender sell the loan to someone else? In such a case, will it affect you, the borrower, in anyway?

11- When you lock rates or points, will the broker/lender provide a copy of the loan commitment letter?

12- Can you get a list of past borrowers from the lender for reference purpose? The names, addresses, email Ids and phone numbers would be fine.

Article Source : Pg. 333

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Both Michael Sterios & Creditscorecowboy.com are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.

Michael Sterios has sinced written about articles on various topics from Internet Marketing, Adverse Credit and Home Improvement. Choose the right product and to suit your n. Michael Sterios's top article generates over 165000 views. to your Favourites.

Creditscorecowboy.com has sinced written about articles on various topics from Unsecured Loans, Credit Cards and Free Credit Report Score. Creditscorecowboy.com: Free credit reports plus credit scores from Equifax. Get your with credit scores instantly. It's free, fast, and easy! F. Creditscorecowboy.com's top article generates over 1600 views. to your Favourites.