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Many of you know that a mortgage or deed of trust is a type of security
or protection that a borrower gives to a lender in exchange for the lender
loaning you money. You may also know that the source that provides us with
this money is given a generic name, like "lender." But who exactly
is
the lender? What kinds of institutions are you actually borrowing from?
Are all lenders the same? Well, here is a description of the most common
types of lenders:
Mortgage Bankers
Mortgage Bankers are lenders big enough to create loans and pools of loans
that they sell directly to lending institutions. They're also referred to as
direct lenders. Examples of lending institutions that buy loans and pools of
loans from mortgage bankers include:
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Fannie Mae
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Freddie Mac
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Ginnie Mae
Any company that assembles, and then sells loans, is considered to be a
mortgage banker. Mortgage bankers can vary significantly when it comes to
size. Some mortgage bankers service the loans they originate, but some do
not. Most mortgage bankers have wholesale lending divisions within their
company. Home123 is a mortgage banker.
Mortgage Brokers
Mortgage Brokers are individuals or companies that unite borrowers and
lenders together, and then facilitate the loan process between these two
parties. The job of the broker is to put borrowers and lenders in contact
with each other. If this contact results in a loan, the broker receives a
commission, often from both parties.
Basically, a mortgage broker is an intermediary. They are typically hired by
prospective borrowers who either don't know much about the lending industry,
don't have time to shop around for different types of loans, or both. The
mortgage broker does this work for them. In this way, the job of the
mortgage broker is analogous to the job of the real estate buyer's agent,
who works on behalf of the buyer to shop around for different homes.
A mortgage broker can evaluate the different types of loans available to
you. They can give you insight as to which banks or financial institutions
offer the most competitive rates and the terms most compatible with your
particular situation.
Be sure to get all the information about the types of loans available to you
in writing so that you can review it. People who obtain a loan through a
broker tend to get more specialized loans than the standard fifteen or
thirty-year loans that you hear about or read about on the Internet. Be sure
to read every little detail so that you understand what your signature
entails.
Note that when you enlist the services of a mortgage broker, you often have
to pay an initial fee or commission once you obtain your loan.
Mortgage broker companies originate loans in order to broker them to
wholesale lending institutions with which they have established
relationships.
Direct Lenders
Direct Lender is a term that applies to any lenders who fund their own
loans. This category can include mortgage bankers, portfolio lenders, small
lending companies, or credit unions.
Call
1-866-774-5172
to speak with an Expert Mortgage Consultant or apply
now
with our
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