Types of Mortgage Lenders

Okay you have decided to buy a new home and you are wondering where to start. The first place to start is to understand the different types of mortgage lenders available. There are many different types of mortgage lenders..

* Mortgage Bankers A mortgage banker is a mortgage lender that is big enough to sell loans to places like Fannie Mae, Ginnie Mae, Freddie Mac, and other loan companies. Some will in fact service the loans that originate while others may not. These mortgage bankers have wholesale lending divisions to really mortgage bankers.
* Mortgage Brokers Mortgage brokers are mortgage lenders that originate loans to sell them to wholesale lending companies. The mortgage broker has been doing business with these wholesale companies for awhile. Mortgage brokers do not do any underwriting or funding. They also only work with wholesale lending companies that have a wholesale loan department within their company structure.
* Wholesale Lenders Wholesale lenders are a type of mortgage lenders that may not have their own retail branch; they may only work with mortgage brokers. Wholesale lenders offer their loans to mortgage brokers at a lower cost that is available at the retail branch to the general public. The mortgage broker can then add his own fee. To you that would mean that you are paying around the same that you would if you went to the retail branch of the wholesale mortgage lender.
* Portfolio lenders This mortgage lender is lending money and originating loans on their own behalf. They do not sell them on the secondary market quickly. Because of this they do not have to go by the guidelines set forth in the Fannie May or Freddie May guidelines. A portfolio lender can determine their own rules for their loans based on your credit. Most of the time portfolio lenders are large banks and savings & loan companies. If you pay your payments on time for a year it becomes known as seasoned, after it becomes seasoned it is then marketable even if your loan does not meet the guidelines set forth by Fannie Mae. When the portfolio lender sells your seasoned loan it then frees up their money so they can make more loans.
* Direct Lenders Direct lenders are mortgage lenders that fund their own money. This can be large or small lending companies. They usually have a credit line where they can draw money to fund all of these loans. Most of the time direct lenders draw up the loan in their own company name.
* Correspondents Correspondents are mortgage lenders that do their own loans and instead of selling them into pools, they sell these loans to a sponsor which is a larger lending company. The sponsor then sells these loans like they were a mortgage banker to companies like Ginnie Mae, Fannie Mae, or Freddie Mac. Sometimes, correspondents fund the loan themselves or the funding may come from a larger lending company.
* Banks and Savings & Loans These mortgage lenders are similar to portfolio lenders
* Credit Unions Credit Unions are similar in operation to correspondents, although a large one could act as a portfolio lender or a mortgage banker.

Now you understand what mortgage lenders are and how they work, you may be able to understand where to find a mortgage loan. Be sure to check with all kinds of lending companies before you make a choice for your mortgage loan.

Enjoy shopping for your new home and finding a mortgage lender that will help your dreams of owning a new home become a reality.