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Types
Of Lenders
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A mortgage is a type of loan that help us to pay for real estate.
The source that provides us with this money is
called lender.
Or we can say that a
person or entity who loans money to others, is called
"lender". He from whom a thing is borrowed.
Here is a list of some of the most common types of
lenders:
Mortgage Brokers: A mortgage broker will likely be the company represented at the loan settlement/closing, they will be providing you with another institutions' money (table funding).
Mortgage Brokers are individuals or companies that unites borrowers and lenders together, then facilitates 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.
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. or
we can say that mortgage brokers do not actually loan money. They will take your loan request and find a lender for you.
Many mortgage brokers have a small staff and outsource many of their operations functions. Their limited staff can reduce overhead costs and provide the opportunity for the broker to pass on these reduced costs to its customers in the form of competitive loan pricing.
When you enlist the services of a mortgage broker, you often have to pay an initial fee or commission once you obtain your mortgage. However, the services of the mortgage broker will likely have saved you money in the long run, so don’t despair too much about this little fee!
Mortgage broker companies originate loans in order to broker them to wholesale lending institutions with which they have established relationships.
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Mortgage Bankers:
Mortgage Bankers are lenders big enough to create loans and pools of loans that they sell directly to lending institutions.
Typically originate loans and then sell these loans to
the secondary mortgage market shortly after funding.
(The mortgage banker may or may not sell the servicing
of the loan.) Often mortgage bankers have attractive
loan programs and rates.
Examples of lending institutions that buy loans and pools of loans from mortgage bankers include:
-
Fannie Mae Freddie Mac Ginnie Mae
- Countrywide Home Loans
- Wells Fargo Mortgage
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Wholesale Lenders:
Most mortgage bankers and portfolio lenders are also wholesale lenders. Some wholesale lenders have their own retail branches. Others rely exclusively on mortgage brokers for their loans.
Borrowers cannot get access to the wholesale divisions of mortgage bankers and portfolio lenders without going through a broker.
Wholesale lenders offer loans to mortgage brokers at a reduced cost than their retail branches offer them to the general public. The mortgage broker adds his or her fee to the loan amount. This means that for the borrower, the loan cost is pretty much the same when he or she gets the loan from a broker as it would have directly from the retail branch of the wholesale lender. The advantage of going with the broker is that, if you are new to the concept of loans and mortgages, a mortgage broker can help you select the right type of loan. More experienced borrowers, however, may opt for borrowing directly from the lender.
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Portfolio Lenders: Portfolio lenders are those institutions that originate loans out of their own funds for their own selves. This means that these institutions are lending for their own portfolio of loans and do not worry about selling their portfolio immediately on the secondary market. Portfolio lenders are generally large banks and large savings and loans associations.
These institutions can establish their own guidelines for approving or rejecting loan applications. Otherwise, they would have to follow guidelines suggested by the mortgage bankers.
Like mortgage bankers, they may offer fixed-rate loans and government loans.
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Direct Lenders:
Direct lenders is a term that applies to any lenders that fund their own loans. This category can include mortgage bankers, portfolio lenders, or small lending companies.
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Correspondents: Correspondent can be an individual or a company originating and closing home loans in their own name, and later selling these loans individually instead of pools to a larger lender often known as a
sponsor. This sponsor re-sells the loan in the form of a pool to other corporations as a mortgage banker.
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Credit Unions:
These savings institutions make loans to their members, who have purchased a share in the credit union. Members are usually people who work in the same industry or for the same company, or live in the area. Credit unions traditionally have made only small personal loans, but many now offer home mortgages.
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Banks and
thrifts or savings and loans:
These are the traditional, but no longer the major, mortgage lenders. Often they are the most flexible regarding whom they will grant a loan, and the amount, because many hold on to the mortgages rather than sell them to investors.
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Computerized loan origination networks
(CLOs): These online services, accessible in the offices of many mortgage brokers and real estate agents, list all mortgage programs, rates and fees offered by a variety of lenders. CLOs also may enable online mortgage application. A caveat: The list of lenders represented may not be extensive.
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Finance companies:
These were once the only source of mortgages for borrowers with credit ratings of B and below.
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National Cooperative Bank:
People who purchase units in a housing cooperative are actually purchasing stock in the corporation that owns the building, so they often have difficulty securing financing. The Washington, D.C.-based National Cooperative Bank, which has affiliates in other cities, exists solely to provide financing for cooperatives.
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