Types Of Different Mortgage
Lenders
There are many types of different mortgage lenders available today and
they come in all sorts of shapes and sizes. The first lender many of us ever
used was the "Bank of Dad and Mom." Whether we were going to purchase a
skate board, walkman, or even our first vehicle, the parents check book was
kept open in order to help make it happen. Interest rates were outstanding.
We could always borrow with little or no interest. Amazing!
All Jokes aside, we are looking at much larger loan amounts these days.
We could be looking to:
- Purchase home/property
- Refinance our existing mortgage loan
- Opening a home equity line of credit (HELOC)
For any of those options, there are numerous lenders out there —
elenders, mortgage brokers, banks, credit unions — happy to assist you in
finding a mortgage loan. It is not because they believe you will be happy in
that beautiful three-bedroom two-bath home in the trendiest part of the
city. It's because they make big money lending you their money. It's called
interest. That is why it is always in your best interest to find the lowest
interest rate possible, with the best terms, which are normally not one and
the same.
Before you learn what an amortization schedule is or learn about the new
50 year mortgage notes, it will help if you understand your options when it
comes to types of mortgage lenders.
Nearly all fall into one of these four
categories:
- Internet lending
- Mortgage brokers
- Mortgage bankers
- Banks and Credit Unions
1. Internet
Lending
Internet mortgage lending has a tremendous presence
online these days and not all really lend money, although it
may seem that way. They are comprised of direct mortgage
lenders, mortgage lending marketplaces, and mortgage content
sites.
Direct Mortgage Lenders
Direct mortgage lenders loan their own money and will include both
traditional and online mortgage lenders. Many of the traditional banks
furnish helpful online mortgage information, including calculators, interest
rates, and educational mortgage content. Online mortgage lenders, on the
other hand, offer mortgage loans directly through the internet. They give
very competitive rates and give you personalized help via e-mail, phone, and
even online chat — but you likely will not meet them face-to-face during
this process.
So, if you are comfortable doing your transactions online and want a
lower interest rate, this choice is well worth looking into.
Lending Marketplaces
Lending marketplaces let you quickly compare quotes from several sources,
whether it is from banks, mortgage brokers or online mortgage lenders
(usually you will quotes from three to four lenders). These services charge
lenders a fee for the chance to fight for your business. Because mortgage
lenders know you are comparing them side-to-side with other mortgage
lenders, they will often give you a very competitive interest rates.
Once you fill out the online questionnaire, mortgage lenders will contact
you by phone to begin the process of finding a mortgage loan that will best
fit your needs.
Content Sites
Content sites concentrate on offering mortgage tools, mortgage
calculators, helpful mortgage content, and educational information. These
websites sites, like MortgageBreakDown.com, usually make money from
advertising, donations and partnerships. Their partners oftentimes include
direct mortgage lenders and mortgage lending marketplaces.
2. Mortgage
Broker
Mortgage brokers are similar to a matchmaking service
since they match you, the borrower, with a mortgage lender.
They will review your personal financial information and
match you to mortgage lenders who you fit with and who will
give you the best interest rate and terms. Mortgage brokers
ordinarily make their money from the mortgage lender since
they are bringing a client to them, but fees might also be
charged to the client.
The reward is a large choice of mortgage brokers to choose from with the
hassle of shopping for interest rates.
3. Mortgage
Bankers
Mortgage bankers may or may not be related with a bank
and their strength is in providing mortgages. Period.
Mortgage bankers (mortgage companies) only originate
mortgage loans, which means they perform credit checks,
inspect and appraise the property, and prepare loan
documentation. As soon as they give you a mortgage loan, it
is then sold to a secondary mortgage lender, such as Freddie
Mac or Fannie Mae. A secondary mortgage lender is in the
business of purchasing existing mortgages from the primary
mortgage lender in order to keep the pool of mortgage money
moving.
This produces strong rivals on the primary mortgage level, which in turn
help to keep interest rates down for borrowers.
4. Banks and
Credit Unions
Banks and credit unions are ordinarily part of the
neighborhood and make their money from the funds generated
from their customers who have checking and savings accounts
or from other services they may offer. They issue mortgage
loans and ordinarily keep control of the mortgage loan, but
sometimes sell it off to secondary mortgage lenders.
Other types of different mortgage lenders include finance
companies and credit unions. Whichever mortgage lender you
choose, the bottom line is to do your homework and most
important ask questions.