Preapproval - preferred lender, mortgage broker or bank?

Question

I am a college student working part time, seeking to obtain a mortgage preapproval for a home. I plan to purchase the home through an FHA loan. Should I talk to a preferred lender, mortgage broker or bank? Any recommendations?

Chris Mason · Answer

Independent mortgage broker market share was single digit 2 years ago, since COVID-19 hit it's risen to around 20%.https://www.mpamag.com/news/even-amid-pandemic-brokers-snap-up-market-share-223529.aspxEach individual bank is handling the crisis differently. One might be great for cash out refis, another for 5% down purchases, and yet another for FHA 3.5% down. This one is lightning fast, this other one is very flexible but slow. You get the idea. It's no longer the case that a single lender can be good, or even decent, at all things. A broker is not tied to a single platform/bank/lender. I think that's the biggest reason for that jump, we're just able to help a far higher % of people that call us.

Here is a real life example: https://www.housingwire.com/articles/uwm-now-offering-interest-rates-as-low-as-2-5/That bank has chosen to be primarily good at exactly one thing. Some of their other stuff is now very "meh," but that VERY specific SINGLE program is clearly where that bank is shoving all surplus resources at the moment. I read an article about food companies cutting down on extraneous fancy stuff (no more strawberry Oreo cookies, for example) and paring their product line down to their core offerings. We're seeing that in mortgage too. A broker is that "grocery store" with everyone's stuff, a direct lender or bank is the Sees candy store that ONLY has Sees brand chocolate, in a COVID world where Sees has reduced their product line to 2 or 3 types of candy (they used to have 400 types of candy).

Jaysen Medhurst · Answer

Start with local banks and CUs, @Apostolos Karnavas. Before going down the FHA route, see if there's anyway you could qualify for a low-down payment conventional loan. Probably a long shot, but less paperwork than FHA, no up-front PMI, and monthly PMI drops once you hit 78-80% LTV.