There is such variety in the types and requirements of
nonconforming mortgage programs that lender comparison is critical. One bank
may require a 10 percent down payment or a large number of assets, while
another may finance the entire cost of the home at a higher interest rate.
Consumers have two major choices: they can compare banks' programs on their
own, or they can have mortgage brokers do the comparisons for them.
Do it yourself?
Some consumers will find the best rates and
the programs that suit them best by calling a number of banks on their own.
These consumers are usually internet-savvy or have an insider's knowledge of
the banking industry.
Many people who might be able to find their own mortgages
are afraid to allow several different banks to look at their credit reports,
because they know that multiple loan applications negatively impact credit
scores. Credit inquiries for mortgage purposes are treated differently by
credit reporting agencies, however. It takes thirty mortgage inquiries to equal
the credit impact of one credit card application.
Do you need a mortgage broker?
Potential homebuyers who do
not have the time or the inclination to call banks and inquire about their
mortgage programs should consider using mortgage brokers. Banks, not
applicants, pay brokers to market their programs, so there is no additional
cost. The mortgage broker will look at all of the programs offered by all of
the banks in his or her database, and will try to come up with a mortgage that
suits the individual borrower.
If you choose to use a mortgage broker, research your broker
carefully. Most are scrupulous businesspeople with their clients' best
interests in mind. A few, though, will charge surprisingly high fees, or push
clients to work with the banks that pay the highest commission to the brokers.