For many years, if you wanted a mortgage to get a home, the kind of mortgage lender you would visit was a bank. Today thanks to competition, the benefits of getting a mortgage from other mortgage financing companies can really benefit you.
Banks are in the main, pretty stable financial institutions. Banks deal with money, and they profit from activities such as offering mortgages to private individuals, and offering banking for corporations. As such as most banks offer free private banking to customers, there needs a way for the bank to make money. With mortgages the bank makes on average 4 times the amount they put in! As you can imagine, mortgages are profitable ventures for the bank. However, like all things that can earn money, there is an element of risk.
The risk that banks put up is always based on calculated risks, so banks may not be the best way to get a mortgage, especially if you have bad credit. To vent this problem and allow more people to get a mortgage, the bank charges a very high rate of interest. This is to the detriment of most people, as you are paying high fees, and any kind of negative on your credit record, could mean a bank will reject your application. The rejection is a bad aspect as it gets added to your credit score, and a few of these could stop you from getting a mortgage.
In came mortgage financing companies. These companies offering mortgages to private and business clients enabled more people to get a home mortgage. Unfortunately, these financing companies which dealt mainly with private clients that had existing debt problems and bad credit, would give a mortgage to these individuals, but it would cost more than a bank would charge in interest! As you can imagine, this does not get people out of debt, it gets them into bigger debt.
There had to be another way, especially for all the people that have mainly good credit scores. So the mortgage financing companies started adding more packages which benefited most of the people. For anyone performing the go ahead of giving you a mortgage, they want safe customers. The mortgage financing companies want customers who will pay back the mortgage, and earn them a profit. In most cases this is what happens.
The mortgage companies started offering mortgage packages which benefited people with good credit ratings. They started offering mortgage packages which had much lower interest rates than banks could offer. This started to get the interest of people looking for a mortgage, who were willing to put in the effort to research the various mortgage companies.
Going with a bank to get a mortgage can be an easy process. If you have been banking with the bank since you was a child, and have been in good standing with the bank, a mortgage with the bank is often streamlined and easy to do. However, being this kind of person could see you paying 10s of thousands of dollars extra in interest. Imagine working an entire 12 months or even a few years extra, in all that time, just to pay what you could have saved with an extra week of research.
There needs to be some caution however with both mortgage lenders, either bank or a dedicated mortgage lender. They both can have clauses which could either be to your detriment or to your benefit. As always select a few packages and look more deeply into them before committing, and always use the aid of financial professionals, who have had experience of mortgages and the process of buying a home, and are there to help you get your dream home.
