Mortgage / Finance
What is the difference between a Mortgage Banker and a Mortgage Broker?
This is a great question!
Simply put, a Mortgage Banker lends their own money to you to purchase a home.
A Mortgage Broker works with many different lenders to find the money for you to purchase a home.
Here are the book definitions:
Mortgage broker: One who, for a fee, brings together a borrower and lender, and handles the necessary applications for the borrower to obtain a loan against real property by giving a mortgage or deed of trust as security. Also called a loan broker.
Mortgage Banker: A company providing mortgage financing with its own funds. These funds are usually borrowed and the financing is either short term or, if long term, the mortgages are sold to investors within a short time.
There are advantages to both. A Mortgage Banker, since they are lending their own money, MIGHT be able to get you better terms or lend you money if you've got marginal credit. Might is the key word. You'll need to shop around if that's what you need.
And shopping around is exactly what a mortgage broker does.
They work with multiple lenders, so often they are able to find the best terms and conditions. Many brokers (and bankers) specialize in areas such as "sub-prime" loans (think marginal credit) or second mortgages, commercial lending, etc.
Just remember, the promise to get you the lowest rate isn't the only thing that makes for a good loan/lender. Your lender can promise you zero interest, but if they can't fund the loan, it does you zero good.
That 5% loan may sound better than a 6% loan, but after paying points, fees and who know what else, is it really a better deal?
The best thing to look for in a mortgage banker or broker is just what you look for in any service person--somone who is professional, who will work hard for you and knows what they are doing. That holds true for lenders, real estate agents and the paper boy.
How can I buy multifamily rentals or commercial real estate for investment?
Buying multifamily and commercial income producing properties can be rewarding investments. At the beginning, you should avoid owning property outside of your immediate area.
That way you can know every property in the neighborhood that fits your investment profile and jump on opportunities as soon as they become available. By being in close proximity, you can also maximize your maintenance and management control to increase asset values.
Successful real estate acquisition professionals inventory every property in the marketplace that meets their profile. To help, you can subscribe to lists compiled from the county courthouse records. Alternatively, drive the neighborhoods and search the records yourself.
Some of the best acquisition candidates are not advertised and may not be listed with real estate agents. By contacting owners, you might persuade them to consider an offer. Three things have to happen for you to negotiate successfully.
- Establish credibility. Get the word out that you have the desire and financial ability to offer a purchase contract and close the deal. Sellers rarely agree to sell on the first visit so be prepared to make several calls. Form relationships with owners of properties that fit your profile.
- Negotiate. Gather enough information about the property and the seller to make an offer. Get the rent roll, historical operating statements, physical details, copy of maintenance contracts, real estate tax bill, copy of the hazard insurance, condition of depreciating components (HVAC, roof, etc.). Don't tell the seller what you're willing to pay. Whomever mentions price first, loses. Instead, explain why you feel the net operating income (NOI) is lower than the seller's estimate. Allow negotiations to be over interpretation of the Gross Possible Income (GPI), operating expenses, reserve for replacement and the NOI. Then, ask the seller what he would think the property is worth with the NOI being lower than he thought.
- Close the deal. All the major business points (i.e. purchase price, seller financing, etc.) should be agreed upon before making a written offer. Then it is up to the lawyers. The contract has to withstand a process known as "due diligence" before the seller gets paid and an actual transfer of title takes place. Your accountants, property inspector (engineer), lawyer and you, pour over the books and the physical structures to make sure that everything the seller told you is accurate. If it's not, the deal may be renegotiated.
Buying multifamily and commercial real estate takes more effort than single family homes but the rewards can be greater.
Are the real estate listings online as good as the Multiple Listing Service that realtors use?
Online real estate listings will vary in their source of listings and in the content they provide for free. In some online real estate listings, you may be shown some of the listings but not all of them, unless you join the service as a member, and then you can see all of the listings.
Other sites are free and show just what is in the local MLS for the area you are searching in. Other real estate sites will let sellers create their own listings, which may not be available anywhere else.
Are the listings shown online currently available?
In most cases the real estate listed online will be currently on the market. But the web site may also show real estate that has already been sold. This is due to the lag time it takes to update web sites.
Some real estate agents may also keep old listings posted even if sold just to get you to call them. If the offer is too good or too cheap, odds are that it has already been sold and is just there to bait you into calling them.
Why is it important to use a real estate search site that gets its information from the MLS Multiple Listing Services?
The MLS is the master list that realtors use to find newly listed and available property. It is the most accurate and complete list of available real estate.
Many online real estate web sites do not get their information from the most current MLS database, so in some cases you are better off contacting a real estate agent who can look at this list every day for you. If you find a web site that is updated regularly from the MLS, this is a good place to look too.
If I find a home that I like online, how do I arrange to see it?
Most online real estate web sites will either charge you to become a member and then provide you the phone number of the listing agent. Others will be part of a regular real estate brokerage in the local area, and will refer you to a live agent for help in looking at the property. Some web sites may try and refer you to a local real estate agent and then ask the agent for a referral fee.
How do online real estate searches work?
Once you find a good real estate web site that you like, you can search for property or homes. You will be asked a series of questions such as the cities and countries you are interested in, the price range, type of property,number of bedrooms, desired features, and other information.
The information provided is general and is not updated or revised for accuracy as statutory or case law changes following the date of first publication. Internet subscribers and online readers should not act upon this information without seeking professional counsel. REPRINTED WITH PERMISSION.