Many home buyers seeking a new mortgage turn to a savings and loan association (S&L) instead of a traditional bank to get their loan.
Savings and loan associations are financial institutions that specialize in savings deposits and mortgage loans.
These institutions typically work with private investors to coordinate funds for a loan.
Since these financial institutions are typically set up differently than traditional banks, depositors and borrowers are granted voting rights and have some say in how the organization operates.
Getting Loans with a Savings and Loan Association
Loans granted by S&Ls are granted based on private investors’ deposits. Home buyers benefit from getting long-term amortized loans and can also apply for loans that cover the costs of home repairs and construction. Homebuyers also have the option to apply for a refinancing program.
The basic loan process at a Savings and Loan typically looks like this:
- Completing a loan application online or offline.
- Wait for the loan approval. You’ll need to work with an attorney who will be responsible for searching the title of the property and ensuring that you will be receiving a clear title. This process also ensures that the bank will have a first mortgage on the home. Your attorney will provide a lender’s title policy to protect the bank in the event of any problems.
- Purchase homeowner’s insurance. You will need to buy homeowner’s insurance before your loan can be closed and funded.
- Coordinate the closing. You will need to work with your real estate agent and the attorney to schedule a closing date.
- Start making payments. The S&L will provide you with a payment booklet or advise you on how to set up online payments for your new mortgage loan.
About Savings and Loan Associations
Savings and loan associations are either state or federally chartered and must meet certain state requirements in order to achieve the “incorporated” status.
S&Ls are also known as “thrift” financial institutions because they are controlled by the Office of Thrift Supervision.
Day-to-day operations are controlled by the officers and directors of the institution, and all operations must be compliant with state and federal laws.
As the banking industry becomes more competitive, S&Ls are becoming more like traditional banks on the outside, but their organizational structure and day-to-day operations are still very different.