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Everyone needs a mortgage today. There are a lot of people and companies vying for a piece of the mortgage business. How can you cut through the junk to avoid the worst Seattle mortgage lenders and scams?

If you need housing (and everybody does), you need a mortgage loan. It can be confusing out there. There is so much noise. Don’t let that hold you back from the smart money moves you need to make. The key is knowing the scams, red flags and poor mortgage lenders, and cutting through them. Here’s what to watch out for, and how to be confident in finding the best Seattle mortgage loans.

We All Need Mortgages Now

It’s way too expensive to rent in Seattle. The only people that can afford to throw their money away on these rental rates are the landlords who own the properties. If you’re going to live here for at least two years, Zillow says it makes more sense to buy a home than rent. For many residents, it is also easier to get a mortgage than it is to get approved to move into a rental. It may even cost you less.

It’s true that Seattle house prices aren’t cheap either. The average Seattle home was worth around $700,000 at the end of 2019. Even if you have a high paying tech job, making $200,000 a year and have been saving half of your salary for the last seven years, you might still be coming up short to buy your dream home with all cash.

The smart and wealthy have always used mortgages. Do you think Mark Zuckerberg really couldn’t find the cash to pay for his home instead of taking out a mortgage? What about Jay Z and Beyonce? Hollywood celebrities like Nicholas Cage? What about billionaire hedge fund managers like Ken Griffin? Whether it is for the tax breaks, liquidity, reducing risk or wealth protection, the wealthiest 1% need mortgages too. If you don’t have one, it’s probably time to do something about that.

Types Of Mortgage Lenders In Seattle

There are lots of companies and individuals running ads on Facebook, TV and sending emails and direct mail to market their mortgage loans to potential borrowers. How do they stack up?

Lead Generation Websites

There are more and more lead generation or marketing sites trying to capture some of this business and profit on the need for mortgages. Sometimes they make it look like they are lenders or are loan shopping comparison platforms.

Really they just want to capture all of your personal data and then sell it as many times as possible to the highest bidders. They can’t legally make loans themselves. They often don’t know whose hands your data is getting into. Many would be borrowers have tried this route in the past. Only to find out their credit was pulled so many times they dropped from a 700 to 500 credit score and can no longer refinance or buy a home.

The Big Banks

You already know their names. You’ve seen the big settlements and lawsuits in the news when they’ve been busted for fraudulently foreclosing on their borrowers, or stole customer data to open accounts in their names. All after you helped bail them out with billions of dollars after they crashed the housing market. You might think they’ll give you a great mortgage deal for being a loyal customer for years. The truth is that even if you put several million dollars through your account each year, you are too small for them to care about. They are so huge, they have so many departments with disconnected people that they really only see you as another number.

If you’re lucky, they’ll charge you some junk fees each month for depositing your money with them, and then loan it back to you for a mortgage at much higher rates and for more fees. If you really love your bank and want your loan servicing with them, you are probably better off going through a mortgage broker. They can get you a loan through that same bank, but at wholesale rates, and often a much better borrowing experience.

Local Banks & Credit Unions

These institutions may try to offer competitive mortgage deals for their members. However, they also don’t have the staff, systems and organization to do this well, along with everything else they are trying to do. They may have limited loan programs to choose from. If you need a local car loan or checking account, they may be a good fit. Just make sure you do some comparisonsbefore choosing to have a mortgage with them.

National Mortgage Lender

There are also big nonbank mortgage lenders. They have once again risen to making a considerable percentage of loans. Some have funny TV commercials and try to be all over the radio and internet. They might have started out doing really well where they are headquartered.

Some may have some unique mortgage loan programs that are much more aggressive than the banks. Aside from trying to make sense of which of these is the right fit, there can be some downsides of out of state lenders. Some will charge extra interest to loan in other states. Some don’t understand local property types and the local market and will end up lending less than someone who knows your property better.

Tech Companies

A lot of tech entrepreneurs have recently tried getting into the mortgage business too. Some have raised millions of dollars from venture capital firms to try it. Some have tried to make the leap into finance because they were frustrated at trying to get a home loan themselves. They wanted to make things better, but then realize there is a lot more to providing great loans an  experience than a better looking website. It’s not easy. It takes years of front line experience actually making loans to really understand this industry.

Mortgage Brokers

Mortgage brokers are different. They aren’t limited to just a handful of mortgage loan programs, or the rate limitations of banks. A local mortgage broker offers immense value by knowing all of the mortgage loan programs in the market, how they work, and the best rates for every different loan scenario. So, instead of you having to give away your personal information to hundreds of people through the internet, wasting months going from turned down application to turned down application, or crashing your credit score in your search, Seattle’s best mortgage brokers do it all for you. They get to know you and your goals, and then match you to the best possible options, at the best rates. It’s like your own personal mortgage concierge who is working for you. They can save months of frustration, wasted time and more.

Now check out this article for tips on finding the best Seattle mortgage lenders and brokers.

About the Author

Helping Seattleites buy their dream homes for over 15 years. Founder of Seattle's Mortgage Broker and author of Homeownership Simplified: The Truth about ZERO Down.