The Consumer Financial Protection Bureau has safeguards in place to make sure mortgage companies operate on a level playing field with consumers. The level playing field specifically has to do with rates, pricing, and whether borrowers are getting a fair and reasonable offer from one lender to another. But how banks look at your financial picture is something else entirely.
Here are some factors that impact how your mortgage company works and the deal you get on your mortgage.
What’s their relationship with Fannie Mae & Freddie Mac?
The relationship your mortgage company has with Fannie Mae and Freddie Mac carries significance in whether or not they can fund your loan even if it is slightly outside the box.
For example, if you’re dealing with a company that originates the loan through another source, and then ultimately that loan is sold on the secondary market, the mortgage originator may be more conservative in its product offering and underwriting. Simply put, the more hands touching the file, the more scrutiny that file is going to have when the loan ultimately is delivered to the end investor.
Are there investor overlays?
Some mortgage companies still have what are called investor overlays, which are additional constraints an individual mortgage company may have beyond what Fannie Mae and Freddie Mac deem acceptable as traditional underwriting standards. For example, some mortgage companies will not let you pay off debt to qualify while others do.
What products do they offer?
Not all lenders carry the same types of loans, and some have differing restrictions for some loan types. For example, the debt-to-income ratio can differ among lenders. If you have a DTI on a jumbo mortgage (a special kind of mortgage based on the amount of the loan) beyond 43%, some companies won’t work with you, while others will go as high as 49%. Another example could be an FHA loan with a credit score, say, at 600 versus one at 640. Some work with a 600 score, some do not. (You can check your credit scores for free on Credit.com to see where you stand.)
Where you get your mortgage is entirely up to you as a smart, well-informed consumer. Do not be fooled by a lender or mortgage company promising you the world just to get your business, only to find later on your loan has too many roadblocks or your financial picture does not meet the guidelines set forth by that company. Integrity in lending and helping consumers is quality you should look for when picking a reputable mortgage source.