Mortgage Companies (So called Mortgage Bankers) also can have several investors to shop your VA rate for you as well, but the difference is they are the initial lender. They make the decisions for the investor and the investor eventually buys the loan from them allowing them to pay back the money they borrowed from their warehouse lines.

Banks too can do this but one of the major differences is, unlike mortgage companies that have to borrow the money at sometimes ridiculous double digit rates, banks lend their own money. Imagine, as the owner of a mortgage company, you’ve borrowed $10 Million at 14% interest and $5 Million of it you lent out at 5.5% but due to mistakes made on the loans, you can’t sell that book of business off. How would you make up the loss? You would have to start charging more or offering higher rates. If a customer doesn’t do enough research, they are the ones that pay.

Although banks are some of the most secure institutions to get your VA loan from, you need to do your research on them as well. If they portfolio their loans, they too can get themselves in trouble as well. They could be sitting on foreclosed properties costing them Millions in revenue. Guess who will ultimately have to pay? You guessed it. YOU. Although you might get a great deal on a foreclosed home through a large bank, you might pay for it another way in a higher rate or fees.

In addition, pay attention to whether the lender is a L.A.P.P. lender or not. L.A.P.P. stands for Lender Appraisal Processing Program. What this means in short, is the lender has been given full right by VA to issue the N.O.V. (Notice of Value) rather than VA having to do it. Most don’t realize that this can cut at least a week from the processing time. So, knowing that the best rate can be attained from shorter period locks like 20 day or 30 day locks, if you are dealing with a Non-LAPP lender you will more than likely either have to pay money to extend the rate or you could lose the rate all together.

Pay very close attention to the lender that originates your loan for you and do your research. You could save yourself literally thousands in closing costs and higher rates.