Finding The Right Home Loan In California

California seems to have a rather unique situation when it comes to home loans. That situation is that there are seemingly more loan originators than there are borrowers. You can't turn on the radio or tv or open the mail without being innundated with advertisements from mortgage companies. So, how does a borrower decide where to go?

Well, for the most part this problem can be resolved with just one little piece of information. For the most part you really can't get a better rate by shopping these loan originators. 99% of them work for or are mortgage brokers. And, mortgage brokers don't actually fund loans. They simply keep up on the qualifications required by lenders who offer the type of loans they are trying to sell. And, for the most part, those loans serve their interests not the borrower's.

That's pretty easy to understand in California, the requirements of being a loan originator here are minimal and up until recently the market appeared to be endless. Then there got to be more originators than borrowers and with it being so difficult to get leads obviously they try to make as much as they can off any loan they can place.

Because of this they try to sell you on Interest Only or Option ARM loans that sound great to start but in the long run will usually cost a borrower much more than they ever saved. Options ARMs are a great example of a loan where a borrower can be tricked. The better the minimum payment and interst only payments found on an option ARM the more the loan will really cost the borrower in the long run. So, if someone sucks you in with a 1% payment rate, realize that it's going to cost you an arm and a leg to stay in that loan OR get out of it.

So, what is the answer for a Californian needing a home loan? Obviously, because a mortgage broker is not limited to only one funding source it is possible they will find you a loan that it would take endless hours of work to find on your own by shopping lenders. But, at the same time that broker is a middle man who is going to make money, too. And, he might have to pay origination fees and commissions on your loan as well, so his cut isn't going to be small.

In other words, it might be worth while to at least talk to a mortgage broker who isn't trying to sell you the loan that makes him the most money but will instead give you options on the type of loan you're looking to get into. But, make sure you pay attention to the fees it's going to cost you to go through that broker, in all likelihood the bottom line is going to be better going directly through a lender even if the loan doesn't seem as good at a glance as what the broker is trying to sell you.

I'm sure this is the case outside of California as well.