Monday, December 11, 2006

Mortgage Brokers and Lenders - Understand The Different Types of Mortgage Lenders

If you're thinking about taking out a mortgage loan, you may want to educate yourself on the different types of lenders before you take those first steps. There are many types of lenders to choose from, including banks and savings and loans associations, as well as mortgage bankers and mortgage brokers. Before you lock yourself into the first viable opportunity, here are a few of your options.

Obtaining Home Loans from Banks

Banks can be a great option due to their flexibility. Often times they can customize their loan packages to meet your specific needs. A mortgage banker is large enough to originate loans and sell directly to jumbo loan investors, such as Fannie Mae, Freddie Mac, Ginnie Mae, and others. Banks can vary greatly in size and most mortgage bankers have wholesale lending divisions.

Home Loans from Savings and Loans Associations

A savings and loan association is a financial institution specializing in savings deposits and mortgage loans. Like commercial banks, they take in and pay interest on deposits from individual savers, and in turn, they lend these funds out to borrowers. They are often mutually held, although if your particular savings and loan association is stock-based or publicly traded, then it is no longer an association and depositors and borrowers do not have any managerial control. Recent changes in US regulations allow them to refer to themselves as banks or savings banks.

Home Loans from Mortgage Brokers

Mortgage Brokers are companies that originate loans with the intention of brokering them to wholesale lending institutions. Mortgage brokers can take the form of an individual or company that brings borrowers and lenders together for the purpose of loan origination. Unlike a mortgage banker, brokers do not fund the loan, but instead work on behalf of several lenders. Brokers typically require a fee or a commission for their services and usually deal with lending institutions that have a wholesale loan department.

Obtaining Loans from Mortgage Companies

Mortgage companies are the principal sources for mortgage loans. Mortgage companies sell the loans to investors, secondary market agencies and other lenders. In the end, it makes little difference to the borrower whether the loan is held by the lender or sold in the market. In most cases, the originator will continue to collect payments and manage the escrow account.


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