What to consider when applying for a Home Loan – Bank vs. Non Banks
When it comes to buying a house, one of the most critical factors is arranging the financing for the deal. Your home loan can be funded by the banks or alternatively, you can go the Non Bank Lending route. Making the right financing decision is crucial as you will be dealing with the mortgage for a significant portion of your future life.
Following is a take on the two options:
Bank mortgage – Traditionally, property buyers are used to heading to the commercial banks for loans. However, the banks are bound by highly stringent standards and unyielding qualifications. For instance, they can provide financing only when the applicant has a high credit score and can provide adequate down payment. Home buyers who fail to meet the limitations are summarily precluded from obtaining a bank mortgage.
Even if the loan applicant manages to fulfill the requirements, banks normally provide access to a limited number of loan products. The loan approval process is also quite protracted and applicants cannot expect to get the loan processed quickly.
Non Bank Finance – Non Bank mortgage lenders have emerged as a viable alternative to regular financial institutions. They provide more flexible loan programs to meet the needs of a wide array of loan applicants with sticky situations. For instance, they will consider home buyers even if they come with a less than ideal credit history and even provide variable payment plan options to accommodate those who cannot foot the customary 20% down payment.
In fact, non bank loan officers have a more personalized approach – they will recommend the most suitable home loans depending on the applicant’s unique circumstances and also provide valuable assistance in evaluating the various loan options. They will willingly address any issues that might arise during the mortgage application process. The loan officers even work with the underwriters which ensures that the loan applications are processed pretty quickly, making private lenders a swift finance solution.
Therefore, it makes sense to explore all options before rushing to sign onto a home loan. Interview various loan officers in both banks and non bank firms to find out the different loan options available to you along with the related interest rates, fees and other closing costs.