How the Lending Industry Works

A quick primer on the mortgage industry

The world of mortgage lending is made up of many different types of institutions who provide different functions. Just as with selling groceries, some lending institutions only provide money “wholesale” to other institutions, and some of those institutions then make those funds available to individual borrowers (known as “retail”).

Some financial institutions, such as certain banks and credit unions, do both wholesale and retail, lending money to other financial institutions and also providing mortgages and loans to their own customers. If they have a retail division, they will usually offer a limited number of loan programs with strict specifications: they will usually only accept employed borrowers with perfect tax returns, perfect or near-perfect credit scores and who fall within certain other parameters. About 30% of all borrowers satisfy these requirements. If you fall within this 30%, you may be able to get a good deal for a mortgage at a major bank or credit union, but if you don’t, you may find yourself having trouble getting the mortgage you need.

Specialized lenders

Thankfully, the mortgage options that are available extend far beyond the few mortgages available at mainstream banks.

As a borrower living in California, you can choose from hundreds of different mortgage programs offered by a large variety of lending institutions. Some of these lenders specialize in particular types of borrowers—such as “business owners” or “veterans.” These lenders understand the financial realities of their borrower type, and they tailor their programs to account for the practicalities of life

For example, lenders know that entrepreneurs usually have a lower credit score than borrowers who are employed (among other reasons, because they take more risks). Niche lenders catering to entrepreneurs accept borrowers with lower credit scores for this reason. So as long as you can afford payments, there is a mortgage program for almost everyone.

What a mortgage broker does for you

With hundreds of different mortgage programs available, it can get pretty confusing for borrowers. Additionally, many niche lenders do not provide service to borrowers directly—they rely on independent “mortgage brokers” to handle the relationship with the client (get the information, process the mortgage application etc).

As a mortgage broker, we do continuous research on the lending programs available—finding programs with great rates and great terms that cater to clients who come to us for service. Lenders continually update their loan programs, so it is important to stay on top of this and be able to match a borrower with the right mortgage for them.

Even within one particular loan program, it is often possible to customize different sections of the mortgage, and in this way we are able to truly tailor the mortgage program to a client’s specific needs.

As an additional service, we thoroughly pre-qualify you using our proprietary in-house “The Qualifier”™ before we submit your mortgage application to the lender. We know what specific lenders are looking for and we can calculate the odds of you getting approved for a specific loan. This is not a guarantee of approval, but it does substantially lower the risk of rejection. Unlike most mortgage brokers, we don’t “throw things against the wall and see what sticks,” as rejections create an unnecessary negative impact on your credit score. We carefully review your file internally and only submit your application when WE believe that you will be approved.

If you want detailed, personal service to get you a mortgage that will benefit your financially for years to come, please call us at 310-294-9417.

“Throughout all of our dealings, Alejandro has always demonstrated the utmost concern, accuracy and professionalism both to his clients and his affiliates.”

— Wendy, Escrow Officer