Looking into the mortgage industry we find that it is critical to match the specific situation with a professional that meets the specific needs. When it came to choosing between conventional banks and credit unions or mortgage brokers and lenders, we found that each has their place depending on the consumer's (borrower) specific circumstance.
We found so many home loan and mortgage refinance programs to fit almost every conceivable situation that the likelihood of walking into a bank with bad credit and expecting to get approved for an decent home loan or mortgage refinance was unrealistic (it never happened). However, if the borrower easily qualified for the "A" paper home loan, conventional banks and credit unions consistently offered competitive rates and low closing costs for top tier, or "A" paper borrowers.
Our experience was that conventional banks and credit unions offer limited home loan and mortgage refinance programs and the borrower must meet those specific guidelines for approval. The loan programs offered by the conventional banks and credit unions we examined were: fixed rate loans (15 & 30 years) adjustable rate loans (3 or 5 year). Conventional banks and credit unions are conservative and seek "A" paper borrowers: higher than average credit score; 30% or more equity in the property; low debt to income ratio (25% or less) and documented income (Tax returns). If a consumer meets these guidelines then we recommend they visit their local bank or credit union and apply for a loan.
Banks and credit unions are very competitive and charge relatively little to originate home loans or to refinance a mortgage. There is no need to seek an expert or specialist in these circumstances. Conventional banks and credit unions seem like the best choice and the home loan and mortgage refinance rates and terms did not vary significantly from bank to bank or credit union to credit union.
For consumers with less then perfect credit, higher debt to income ratios, and/or hard to document income (self-employed or commission sales) we found that conventional banks are not competitive. In fact, conventional banking institutions declined home loans and mortgage refinance applications presenting even minor difficulty.
We found mortgage brokers and specialized lenders that represent dozens, if not hundreds of banks and could offer hundreds of programs with a wide variety approval guidelines based on an individual's unique situation. Loans that were declined by conventional banks and credit unions were regularly approved through brokers at interest rates similar (within 0.025) to the conventional bank or credit union's "A" paper rates.
