How to search for a Mortgage Lender?

[Jorge J.]

Hello,

I am new to RE and am looking to perhaps purchase my first property. 

However, I am a bit confused in where I should go to get a pre-approval? Should I start with Banks ( Such as Chase, Bank of America etc..), should I look for a Mortgage Broker or Direct Lender? How to properly research and compare different mortgage rates? There seems to be SOOOOO many options out there I am getting dizzy!

Any advise would be much appreciated

[Chris Mason]

Originally posted by @Jorge J.:

@Russell Brazil But wouldn't a Mortgage broker be acting as a middle man and collect a finder's fee, whereas going with a direct lender, this fee is "non-existent" since we are going straight to the source?

 I both broker and direct lend as appropriate (licensed mortgage broker, official job title is loan officer, I really don't care what you call me, but Russell here would probably call me a mortgage broker), so I've got no reason to be biased on this subject.

If either channel was always the best, the other channel would have gone out of business years ago. Brokers add middle man fees... to wholesale interest rate prices that are already discounted. Retail rate sheets by contrast have operating expenses built into them and do not need to be marked up. It's usually pretty close to a wash, or when I hold the rate constant it's like 20 basis points (to price, not to rate) or something trivial, coin toss which will win on any given day.

I prefer to have my direct lender hat on to my broker hat when working on REI deals (not licensed in your state, don't actually bother PMing me) because your situations are always wonky and I need that direct telephone/IM/email line of communication to the assigned decision making underwriter so I can go over your net loss carryover, or weird Schedule C, or funky deposits, or whatever it is, with her and get it resolved in 5 minutes rather than over the course of 5 days of emailing back and forth through some intermediary.

Brokering mortgages is for your white picket fence "we are W2 employees that have been saving up for years and are ready to buy our first house!" vanilla purchase transactions where you aren't exposing the transaction to any reliability risk because it's so simple a dead chihuahua could underwrite it.

Just to add confusion to your life, your realtor referring you to someone like me will likely call the local-to-you-me a mortgage broker even though in reality it might be quite rare that the local-to-you-me brokers on REI deals. But your realtor might be utterly convinced that it'll be a brokered mortgage because she or he never asked. :P

Just to add even MOAR confusion to your life, there is something called correspondent lending which is a hybrid of the two.