Is there a difference between lenders?

While several different types of lending organizations offer home mortgages … one question that pops up often is this: “Is there really a difference between lenders?”

The short answer is: “Yes.”

Historically, most homebuyers went to their bank to get their loan. But since the creation of the Consumer Financial Protection Bureau, things have changed. Richard Cordray, director of the CFPB recently remarked: “We’re working to create a level playing field for all consumer financial products. Much progress has been made on this front.”

Even so, when it comes to mortgage lenders, consumers should be aware the rules are not the same for all. Those homebuyers who know the difference will be better prepared to make the right choices.

The most commonly used type of lenders are banks, mortgage banks and mortgage brokers. While all three of these entities can make you a home loan, how do you determine which can give you “the best deal” on your loan? Let’s take a look at the basic differences.

Banks and mortgage banks operate pretty much the same, in that:

• They are both typically ‘direct lenders’ who offer loan programs and services from a single bank, so buyers receive loan estimates (fees, costs, and interest rates) from only one entity.

• They are not subject to earning limits on your loan; nor are they required to disclose to you the total income they make from your loan.

Meanwhile, mortgage brokers:

• Use your single loan application to shop with several banks and lenders at once to find the lowest interest rate and best loan program for your situation.

• There is a limit to how much a broker can earn on your loan, and it must be fully disclosed to you.

• Can offer you a true “No Fee” loan.

According to Rick Piette, owner of Premier Mortgage Lending in Las Vegas, “It really all boils down to these two facts: (1) Before your home loan closes, what’s important is how much you’ll pay in lender fees, and (2), after your home loan closes, all that’s important is the interest rate.”

Piette goes on, “It may sound like a simple formula, but because of the differences in how types of lenders can operate, it’s not always easy to find those two answers.

That’s why we created our new www.KnowBeforeYouOweNevada.com website. It gives consumers concise explanations on the basic facts of mortgage lending, so buyers know what to look for, what to ask and how to read all the forms they will be presented within the process.

“So how do borrowers protect themselves?” Piette asks. “The next time you get a loan estimate from a lender, ask them for an interest rate that has no fees. Then get a no-fee quote from another lender and compare the interest rates. This way, there’s no confusion.

You’re able to compare apples-to-apples, and make the most cost-effective choice.”

For additional information about how to know what your mortgage loan will cost you, visit www.KnowBeforeYouOweNevada.com. Or call Premier Mortgage at 702-485-6600.

Premier Mortgage Lending, NMLS No. 393282, is at 701 N Green Valley Parkway No. 125, Henderson. The full-service lender is a member of the Las Vegas and Boulder City chambers of commerces, Better Business Bureau and Southern Nevada Home Builders Association, and an affiliate member of the Greater Las Vegas Association of Realtors.