| Most home buyers finance real estate, which means | | | | the S&L crisis in the 1980s, President Bush in 1989 |
| almost all home buyers will need to get a real estate | | | | signed the Financial Institutions Reform, Recovery, and |
| loan. So what are your lending choices? Where can | | | | Enforcement Act of 1989 (FIRREA). Many savings and |
| you get a real estate loan? Which type of real estate | | | | loans are now regulated by the Department of U. S. |
| lender is best? | | | | Treasury, Office of Thrift Supervision. |
| Unfortunately, there is no pat answer because the | | | | * Primary source of business is making real estate |
| best choice for you depends on your personal | | | | loans. |
| situation, the type of property you want to buy and | | | | * Savings and loans do not make business or |
| how the lender's rates compare within the lending | | | | commercial loans but lend for construction, purchase or |
| community. You can get a loan from a variety of | | | | home improvement purposes. |
| sources such as: | | | | * The process for obtaining a mortgage is a bit easier |
| Mortgage Brokers | | | | than going to a commercial bank. |
| More than half of all the real estate loans made in the | | | | Credit Unions |
| United States originate from mortgage brokers. A | | | | These institutions are regularly under attack by lending |
| mortgage broker is a middle-person who brings | | | | competitors because credit unions do not pay federal |
| together lenders and borrowers. Mortgage brokers | | | | taxes and enjoy certain taxable advantages that other |
| each work with different lenders, sometimes 200 or | | | | lending institutions do not. They are formed by a group |
| more. It's important to ask about the variety of | | | | of individuals with a common interest such as state |
| products offered as this will vary from broker to | | | | government and community education employees or |
| broker. Your choices are dependent on the broker's | | | | religious groups. |
| number of working relationships. | | | | * Customers must meet qualifications to be eligible for |
| * Fees are paid by the buyer or lender or both. | | | | membership. |
| * Loans at "par" mean the buyer is not paying a fee. | | | | * Interest rates and terms are typically very attractive |
| * Yield-spread premiums (YSPs) are typically disclosed | | | | and competitive. |
| at closing and paid by the lender. | | | | * Many credit unions do not sell their mortgage loans |
| * Mortgage brokers can also operate as "up-front" | | | | on the secondary market. |
| mortgage brokers, meaning they will negotiate a fee | | | | # Private Individual |
| directly with the buyer in exchange for shopping for | | | | Anybody with money in the bank can make a real |
| the lowest (wholesale) interest rate & fees. | | | | estate loan to you as long as they comply with federal |
| Mortgage Bankers | | | | and state regulations regarding such items as interest |
| Mortgage bankers, as you may have guessed, work | | | | rates, fees and charges, and provide legally required |
| for a bank. They may represent more than one bank | | | | disclosures. |
| but the loans they make are bank loans, funded by the | | | | * The seller can carry back common financing |
| bank. | | | | instruments such as a mortgage, trust deed or land |
| * Fees are generally not negotiable and are set by | | | | contract. |
| bank policy. | | | | * No appraisal or title policy may be required, but you |
| * Loan products are limited to those the bank offers. | | | | should still obtain an appraisal and title protection. |
| * The banker may not be licensed. | | | | * Owner financing works best on properties that are |
| Commercial Banks | | | | free and clear because an existing loan will most likely |
| Citigroup, Bank of America, and Wells Fargo are good | | | | contain an alienation clause. |
| examples of well known commercial banks. | | | | Stock Brokerages & Online Lenders |
| Commercial banks offer a wide variety of services. In | | | | You might be astonished to learn that the company |
| fact, you probably have a bank like this in your | | | | handling your IRAs or mutual funds or online savings |
| neighborhood. | | | | also makes mortgage loans. A few easily recognizable |
| * Primary source of business is not making mortgage | | | | names are HFC Home Loans, INGDirect, Charles |
| loans. | | | | Schwab, and Ditech. |
| * Bank rates are competitive. | | | | * If you need to shake hands with your loan officer in |
| * Your bank may offer a discount or incentive on your | | | | person, an online lender might not be for you. |
| loan if you maintain a checking or savings account at | | | | * Internet lenders seem to work best for sophisticated |
| that institution. | | | | borrowers with great FICO scores who know exactly |
| Savings & Loan Associations | | | | what they want. |
| Savings and loans accept deposits from customers | | | | * Contact only reputable and known companies with |
| into savings / money market accounts and pay | | | | secure sites, and stay away from fly-by-night |
| interest on those accounts. To prevent a relapse like | | | | operators. |