When the time for a loan has come, people always start researching their options. That’s probably why you’re reading this article too. In it, you’ll be able to see the difference between the options you probably already encountered. Make a comparison between them and choose what fits your needs best.
Read on and find out what different institutions offer. Some will be bad for you, and others will seem better. It’s important to look thoroughly and explore the options. Not everything is written with big letters. Some things are hidden but very important, so make a good choice.
Table of Contents
Banks
Banks are the most accessible institutions lending money. They have flashing signs and lots of marketing ads where ever you turn. When you ask for a loan, they’ll promise you everything but they won’t say anything about your obligations. In the bank, be sure that you have more obligations than you have rights, so be very careful when you ask for a loan through a bank. Read about bad banks here.
Even though the bank’s employees will try to convince you, do know that the only positive side of the banks is that they probably have the best technology available for managing your money on the account. Banks have the highest interest rates and the worst mortgage loans in general.
Credit unions
Credit unions are a much better solution than banks. Why? Because they actually care about their clients who are not real type clients, but members. Members who are a part of the union trying to build a better society for everyone.
If banks are into profit, the credit unions are trying to make all members satisfied. That’s why interest rates are much fairer with them and the overall experience is much better. If you miss a monthly payment with the banks, you’ll probably get a call from an operator. If you miss three of them, you might get you mortgage activated. With credit unions, it’s not like that. See an example of such a union on this LinkedIn profile.
A person whose job is to track down your payment will also call you and ask if you’re having a hard time finding money. They’ll ask you to come over and see them so you can find a better solution together. Think of these organizations as something like a non-profit group dealing with money. Actually, their status officially is a not-for-profit organization which means they work just to make the money stay in the union and keep the members happy. The profit is not their main goal, and this gives you a lot more confidence to trust your assets with them.
Specialized mortgage lending institutions
There are also institutions that are specialized in working with mortgage lending. They offer mortgage loans and that’s all they do. In order to be successful, they offer their own programs that can be a great deal for some people. However, it’s not something you can change, choose from, or manage. These institutions have a limited offer.
However, sometimes they have great options. Their ideas are presented clearly and directly. The only thing you need to watch out for is to ask for their license. All lending institutions are required to have an FHA permit for work. Be sure you ask for it.
Private mortgage lenders
Private lenders don’t differ too much from the institutions. They also must have FHA approval. If they don’t, you should know that you might be having a job with a scammer. Private lenders are great because the person you’re talking to is lending you the money. You can see if you like them or not and make a decision if you can go through this deal or not. The main problem here is that private lenders often can’t meet your needs.
Homebuilders programs
A lot of companies that are into construction have their own lending programs. They act like mortgage brokers and offer terms that often are not bad at all. With them, you can buy a new home using their loans. These programs are good because you’re directly negotiating with both the homebuilder and the lender. Instead of wasting time and energy, you have both things covered in the same place. Read more about this here: https://www.investopedia.com/terms/c/construction-loan.asp