subject: Real Estate Loans: Types Of Mortgage Lenders [print this page] When you make the decision to obtain a mortgage you may be lost on where to obtain financing from. There are a variety of sources from which you can get financing so it is important to know the difference to determine which would be the best for you.
Banks, Credit Unions
Banks and credit unions obtain funds by getting deposits from people. The money that people deposit is then used to give loans for both businesses and individuals. Another way some of the larger institutions make money is by selling securities in financial markets such as Mortgage Backed Securities. Since each individual institution operates on its own rules and regulations, it may be a hit or miss on whether you are approved at each one. This may hurt or help you depending on your financial situation. Another service that may be offered is a mortgage lending service with a trusted mortgage broker or banker. Each institution has their own policies so if you're unsure a phone call can answer your questions.
Most banks and credit unions have their mortgage loans serviced directly by their employees so your payment is sent directly to them every month. A local branch may also be easier to deal with if you desire that from your lender. If you do business with them in other areas you may also get a better deal since all your financial affairs are with them and they want to keep you happy. Customer loyalty can play a huge part in which company you decide to go with when you finally decide to get a mortgage loan and they are very well aware of this so use it to your advantage.
Mortgage Loan Bankers
A mortgage loan banker has its own credit line with a large bank which they will use part of to loan money to potential home buyers.
Mortgage loan bankers are only focusing on getting buyers home loans so they are very centered on this process. They often can help all sorts of people in a variety of circumstances get financed for the lowest possible interest rates. They typically service their own loans which mean your payment would be remitted directly to them every month. If they're local and you want to keep your money there, make sure you get information on how much of their clients are serviced locally.
Mortgage Loan Brokers
Unlike the previous two, a mortgage loan broker does not actually lend you the funds to buy a home. They work by finding a mortgage lender for you. They are the representative for the transaction but the funds will be coming from an outside source for your home. This is commonly referred to as table funding.
Benefits of using a mortgage loan broker
Mortgage loan brokers are very skilled at working with lenders to try to get financing so they are able to use all their sources to find a mortgage that will work for you. This is especially helpful if you have any financial circumstances which may hinder your ability to get qualified directly with a lender. You should consider one if you have bad credit, may be self employed, or even if your down payment is going to be coming from a non conventional source. They have lower costs in the overhead which get passed directly on to you by giving very competitive loan pricing.
You want to choose a mortgage lender that you are completely satisfied with. This is usually established with the point of contact you have for the firm or institution who may be representing them and working directly with you, the borrower. You should have all your questions answered and feel comfortable working with them. The process should really be focused on how comfortable and confident you feel working with the individual who is handling your affairs.
