Direct lenders. These lenders fund their own loans. If you've seen "seller financing" you are familiar with this type of lender, but "seller financing" can also refer to another type of lender.
Correspondents. These lenders originate and close home loans in their own name, then sell them individually to a larger lender, called a sponsor. The sponsor acts as the mortgage banker, reselling the loan to a major investor.
Mortgage Brokers. Mortgage brokers are companies that originate loans with the intention of brokering them to lending institutions. They have access to wholesale lenders' rates and can find the best rate for the borrower. If the borrower is declined the first time, the mortgage broker may have backup lenders for them. Mortgage brokers are only paid if they find you a loan, which makes them motivated to find one that fits your needs, however, mortgage brokers' loan officers do not necessarily offer the lowest rates, and they are not always able to work with someone who has a problematic credit history.
Wholesale Lenders. Most mortgage bankers and portfolio lenders also act as wholesale lenders, catering to mortgage brokers for loan origination. Wholesale lenders offer loans to mortgage brokers at a lower cost than their retail branches offer them to the general public. However, the loan costs will usually be the same to the borrower since the mortgage broker then adds on his fee.
Banks and Savings & Loans. They usually operate as portfolio lenders, mortgage bankers, or some combination of both.
Credit Unions. Credit unions usually operate as correspondents, but larger ones are able to act as a portfolio lender or a mortgage banker. Their rates are often lower than a bank's or a savings & loan institution, but much like a bank or an S&L, they aren't apt to work with someone who has a poor credit history.
Of course, there are always exceptions to these, but these are fairly common with these lender types. If you know of a good, or even a bad lender, please share the lender and your experience with our readers in the comments section. Knowing a good lender is imperatviely important, in most cases, when someone is seeking to buy a home, condo, residential or commercial investment property. If you do not plan on buying using cash, the right mortgage can quite often allow you to purchase the home or other property type that you are dreaming of.
Article comments
1 - Eric Olsen
important information, thanks!
2 - kenny
Inside Finances is a network of sites dedicated to helping you make those crucial financial decisions, including real estate. Our real estate network provides you the opportunity to search by state and city, gather important real estate information and choose a realtor that suits you best. Whether you are buying or selling a home or looking for property, our experienced realtors will help you make the crucial decisions about your next real estate venture. Search through our real estate topics to gather essential information that prepares you to make smart, informed decisions.
3 - Mr. Real Estate
Kenny, Exit Realty Suncoast recently teamed up with ALTA Financial, so now I can do both mortgages, as well as help buyers and sellers with their real estate needs. I have been helping people with their mortgage and real estate decisions through my articles here at Blogcritics for quite sometime now, and now I can help them with both their real estate and mortgage needs directly, so our readers will never have to worry about your SPAM again. Isn't that great news?
Cheers,
-John Mudd
"Mr. Real Estate"