Q: I read your article this past week about shopping around with five sources for a mortgage. But I am embarrassed to say I wasn’t quite sure what you meant by “Big Box” lender and is that opposite of a “Small Box” lender?
I’m just starting to shop for a mortgage lender so please answer when you can.
A: I use the term “big box lender” when referring to the megabanks: J.P. Morgan Chase, Citibank, SunTrust, Wells Fargo, and others that are enormous and account for a significant portion of the consumer lender market.
I don’t use the term “small box” lenders, but I’d say that other than one of the big banks, you’d also want to shop for rates with small, local lenders. These would include regional banks, small banking companies or savings and loans.
You should also talk to your local credit union (if you belong to one or can join one) because nonprofit credit unions have historically offered very good deals on mortgage and auto loans.
Another category of lender is represented by mortgage brokers. Mortgage brokers represent anywhere from five to 50 (or more) different end investors and may be able to offer different loan programs, with different fees and points.
Finally, it’s always worth spending time online to see what you can get with various lenders. You can shop for a mortgage at Zillow or QuickenMortgage, among many other online mortgage companies, or look at rates at BankRate.com.
Each of these different types of lenders plays a different role in the mortgage financing game, and if you’re shopping around, you should talk to at least one of each different type of lender or at least investigate their information on the web to find the best loan at the best interest rate and with the best terms for you.
Hope this helps.