Over the years, mortgage options were likely limited to what a person's local bank was willing to offer him or her. But today's new marketplace provides several fresh opportunities. With the continuous influx of alternative lenders, many homebuyers are now fully ready to connect with lenders all over the nation. Online, they can check out several loan systems to the extent of choosing their preferred way of borrowing.
For the first-timer or homeowner looking to refinance a family homestead, alternative lenders are worth considering as you begin the loan-shopping process.
What is an alternative lender?
Succinctly, an alternative mortgage lender is a non-bank entity that provides you with home loans. These lenders offer homebuyers benefits they won't get if they go through their local banks.
Today's market is getting more intense and saturated with lenders from which to select and brokers who will utilize that extensive knowledge and experience to help homebuyers navigate the arena to get the best mortgage.
Also, you may notice that your bank mortgage options restrict applicants with low credit scores or poor employment history. If you may fall into any of these categories, then you will need to embrace alternative mortgage lenders since they offer you loan options you won't see anywhere else.
Types of alternative lenders
At the onset, when you start your mortgage search, you will come across two categories of lenders. The direct lender and the middlemen. The direct lender is the business that offers some loan products. Credit unions, banks, and a few online lenders belong to this category. The middle man, on the other hand, includes companies whose duty is to bring homebuyers to lenders. Good examples are the brokers and lending marketplaces.
Although alternative mortgage lenders bring people a step closer to homeownership by reducing the high cost of bank loans, they still have their merits and challenges.
- A quick and straightforward application process
- You may receive the funds within a day
- You can get a loan even if you have a poor credit history
- You can develop a good relationship with the lender to get a lower rate perhaps next time
- Most of their loans are usually a large amount
- Some alternative mortgage lenders may charge you hidden fees
Choosing to get your home through alternative mortgage lenders is a personal choice. However, it is exciting to know that there are more options when it comes to financing your home. Before choosing a lender, seek pre-approval from both a traditional lender and an alternative lender.