If you are buying a home in California or you are about to refinance the mortgage you have then you’ll need to find someone that can make that happen. You’ll have three types of mortgage companies that you’ll be able to choose from:
- Mortgage Broker
- Direct Lender
- Local, State or National Bank
Each type of mortgage company offers various loan programs, interest rates and different levels of customer service. And all three types of mortgage companies offer Conventional loans and most everyone also offers Jumbo and FHA mortgage loan programs.
What Is A Mortgage Broker?
There seems to be a lot of confusion about what a Mortgage Broker does. A Mortgage Broker in California works on behalf of the borrower (the person buying a home or refinancing a mortgage) to locate the lowest rates and terms with various lenders throughout the state. The Mortgage Broker does not work for the lender and a Mortgage Broker does not fund the loan at closing.
What Is A Direct Lender?
A Direct Lender is company that borrower’s money from a bank to lend in their own name and then sells the loan to the bank that originally provided the money. The Loan Officer generally only has one option to place a loan unless the company allows its loan officers to broker out certain select loan applications.
How Are Banks Different?
Banks are different because they generally (not always) are the ones that provide the funding for mortgages. The loan officer with the bank does not have the ability to place the loan with another mortgage company (like a loan officer who works for a Mortgage Broker).
Benefits Of Working With A Mortgage Broker In California:
Thousands of people every month choose to work with a Mortgage Broker because of the many benefits brokers provide.
- The ability to work with many different mortgage lenders to locate the best rates and terms.
- They work for the borrower and not the original lender.
- Since they work with so many different sources Mortgage Brokers tend to be more educated as far as general industry regulations and guidelines.
- Mortgage Brokers can typically close loans much faster that your traditional lending sources.
Questions To Ask A Mortgage Broker:
When you chose to work with a Mortgage Broker here are some good relevant questions to ask when you obtain the quote.
- How long will it take to close?
- When can I lock in my interest rate?
- Do I have any out of pocket costs?
- Can I switch loan programs during the process?
Asking good relevant questions is a smart thing to do when refinancing a mortgage or buying a home. Too many people don’t know what’s going on and that can cost them time and money.
Conforming Loan Limits In California:
Fannie Mae and Freddie Mac have higher loan limits in 2020. The Conforming loan limits in California are now $510,400 and in high cost counties it is as high as $765,600. This will be a big help for homeowners in California as the look refinance higher loan amounts or purchase bigger homes.
In 2019 the Conforming loan limit was $484,350 and in 2018 the limit was $453,100.