Niche lending is hardly a new phenomenon but with the tightening of lender balance sheets in recent years niche lenders have become more valuable to real estate professionals as they refer their clients to their trusted referral partners. Agents want to refer their clients to lenders they trust will get the job done right and be an extension of the customer service they have built their business on.
Top MA real estate agents will tell you they like to work with multiple lenders for several reasons; it’s never good to have all your eggs in one basket, some lenders have personalities that work better with first time home buyers while others work better with seasoned investors, and perhaps most important is that different lenders have access to different products. At the end of the day your preferred lender can possess all the positive consultative traits that you look for in a top MA loan originator, but if that lender doesn’t have access to the right products for your client’s specific needs the customer service quickly becomes a moot point.
So What is Niche Mortgage Lending?
A Niche lender specializes in one specific area of the mortgage market and as a result has underwriting guidelines that are unique to them or at the very least few other lenders have the same products or can make the same level of underwriting exceptions. These mortgage programs and guidelines are aimed at satisfying a specific market and client demand. More access to more programs means your MA prospective homebuyer has a great chance of leaving their appointment with their Mortgage Buddy pre-approval you can be confident in.
Niche mortgage lending can be associated with either government loans such as FHA insured mortgage products OR conventional loans such as those backed by Fannie Mae or Freddie Mac. These programs have standard guidelines that are updated frequently depending on market demand and the stability of the housing market and 
overall economy. Although there are standard underwriting guidelines and standards for these mortgage programs individual lenders will adopt their own niches and overlays depending on their risk tolerance. This is why it is so important for Realtors and prospective homebuyers to work with a lender that has access to multiple products and lending windows. Product diversity means prospective clients only need to fill out one mortgage application and have one credit inquiry on their credit. In a competitive housing market matching the best product for a specific need the first time can be the difference between an accepted offer or scrambling for financing and being forced to move on to the next home.
Some Examples of Niche Mortgage Lending
FHA Insured Mortgages – Many lenders will only lend down to a 640 middle credit score or go to a 45% debt to income ratio whereas some will go down to a 600 score and go up to a 55% debt to income ratio.
Conventional Loans- Overlays are not has common with conventional lending but many lenders will require different down payments amounts depending on credit score or property type, whereas some lenders will require only 5% down on a single family or just 10% down on a two family.
You have the ability to interview a prospective lender and ask them about specific guidelines and programs. Spending some extra time at the beginning of the process to understand your lender can be the difference between closing on time or having to change mortgage companies in the middle of your transaction.
The Mortgage Buddy works for a company that is both a direct lender and a broker with 25 different lenders that have 25 different sets of guidelines. Product diversity and product knowledge makes all the difference in a competitive lending environment; please call me anytime for more information.
This Post is “Mortgage Buddy Approved”
