 | Randy Vickers is the owner of Priority Mortgage Corp of Wichita, which opened in Jan. 1989, is the oldest locally owned mortgage company in Wichita. Randy has been in the real state business since 1983 and is a licensed real estate broker as well as a licensed mortgage broker. Priority Mortgage Corp of Wichita KS Lic #1996-0122. Randy can be reached at 316-721-7700 |
Real Estate
2007-05-01 13:27:00
Bank versus mortgage company
Answer: The main difference between a bank and a mortgage company is that a mortgage company does not take deposits, such as checking, savings or CD’s. Most banks use a deposit base to loan money for various reasons such as car loans, business loans and home mortgages. In general, most banks do not provide long term financing with their own funds. Most participate with the large government sponsored agencies such as Fannie Mae or Freddie Mac, and then sell the mortgage loans to Wall Street investors in packages called mortgage backed securities. The banks, in most cases, don’t want the long term interest rate risk associated with 30 or even 15 year mortgages. Some banks do retain the rights to servicing the loans they originate, which means they will collect the payments, pay the hazard insurance and make sure the property taxes are paid. A smaller and smaller part of the banking community will put some of these loans into their own loan portfolio. These loans are usually those loans made to long time customers, and the loan terms are usually not fixed rate, or are for shorter terms.
A mortgage company specializes in mortgage loans, does not take deposits, and usually does not service loans. They will also work through various channels to provide loans to Fannie Mae or Freddie Mac for Wall Street investors. Since a mortgage company only does mortgage loans, they offer a wider variety of options for loan programs and terms. The development of technology has allowed mortgage companies to speed the process of loan approval and closing. This has also expanded the opportunity for home ownership to more and more people. In the last 5-7 years, the mortgage brokers have increased their market share to the point that in most markets, over 60% of the home loans made are by mortgage companies. In most cases, these are made by smaller companies that depend on personal contact and excellent service to maintain and grow their business.
In Wichita and the surrounding area, mortgage brokers are very active in all parts of the housing market. FHA, VA, and a growing variety of conventional loan products are available to provide many options for the potential home buyer. Many mortgage companies also offer loans for real estate investors and commercial projects.
The mortgage industry can be a very up and down ride as mortgage rates and economic factors influence the amount of business available. Those that have been through these cycles have experience that is very valuable in the process of helping consumers tailor a loan to their situation.
Banks compete every day for your deposits, car loans, business loans and mortgages. The mortgage company, by specializing, has broadened the possibilities and opportunities for the consumer in the quest to become a homeowner or real estate investor.
Summer is almost upon us, and it is a great time to evaluate your next real estate purchase…more next month…
