When it comes to sources of funding for mortgage loans, there seems to be confusion amongst prospective mortgage clientele, even with the mortgage broker customers, who are re-investing into the real-estate market by purchasing larger homes, town-houses or condominiums for their families. The paradigm seems to be influenced and manifested by
advertisement and learned behaviour. When you think lending, most of you will be thinking about large banks. Not quite so.
Funding for a mortgage loan can be sourced from many origins:
- Credit Union
- Private sources
- and even from the Seller of the subject property in form of a Vendor-Take-Back Mortgage
What is a Monolender?
Frequently my clientele ae asking me about the term Monolender. Who or what are they? What will happen, if they cease their business operations?
Monolenders are lenders, who solely focus on lending money with real-estate as secured collateral, thus mortgage. They do not have a retail outlet in form of a branch office in a retail corridor, and mostly deal with mortgage brokers directly. Think of them as wholesalers of mortgage loans. They specialize in mortgage loans only – no savings, no credit cards, no car loans. Just mortgages.
Often they even specialize in certain geographic areas, even in the type of collateral. Because they pursue this special activity, they have specialized in particular skills, providing expertise beyond what is usually expected from corporations, whose businesses are spread across many disciplines.
Be as it may, the most important factor to me as a mortgage broker is that I am dealing with highly specialized lending professionals. When in need and things are not going well for a client, I can reach decision makers within the organizations via the shortest and most efficient path. This helps save time, often money, and reduces the stress level of my clients.
As mortgage brokers we realize enhanced customer service to us as brokers and to our clientele in equal amounts. Monolenders are excellent at creating innovative products, programs and services and are most proficient in risk management.
But what if they cease business? Remember you are not depositing money, you are receiving their money. It is they, who concern themselves with receipt of their loan payments on time and in full. Think about it this way: If Uncle Ernie gave you a loan, and he passes a way tomorrow; what would happen?
Many times a Monolender may offer interest rate quotes at a 0.1% lower rate than some of the large lenders, because they are specializing, mitigating their risk, and they have no major real-estate expenses retaining a rather small, but specialized staff.
A 0.1% lower interest rate can save you as much as $1,200 over a 5 year term on a $250,000 mortgage. Wouldn’t you want to save this kind of money?
Compare quotes and discuss the timely thematic of the Monolender with your Mortgage Broker. It can save you money to deal with a relatively unknown, small lender and you may be able to avoid restrictive contract terms.
Think about this: If you were to go for brain surgery, would you want your General Practitioner to perform the procedure or would you rather have a specialized brain surgeon operate on you?