Know What Type of Mortgage Lender is Best for You
A Home Buying Article Contributed by Robert Scalia
Know What Type of Mortgage Lender is Right for You
A mortgage lender is the one who provides the money to the borrower at the closing table.
But it's so much more complicated than this. There are different types of lenders out there: retail lenders, wholesale lenders and direct lenders. Which one is right for you. Well, it's hard to answer that question if you aren't even sure what each one actually does,
Learning What Type of Mortgage Lender Does What
A mortgage lender who perform all the loan origination functions themselves are called retail lenders. Lenders, by contrast, who outsource certain functions to mortgage brokers are called wholesale lenders. A direct lender, on the other hand, is one that small lenders sometimes use to distinguish themselves from mortgage brokers.
Now that you know your lenders, it might be also worthwhile to note other mortgage representatives that you might find while searching for a home mortgage.
Loan officers can wither be employees of lenders or mortgage brokers. These officers will find, sell and counsel customers by taking applications. they are like the foot soldiers of the mortgage lender. Loan officers who are employed by mortgage brokers may also be involved in the processing of your loan, although this isn't always the case.
Keep in mind that even though they are employees, loan officers actually behave more like independent contractors. They are compensated largely on a commission basis, so you the borrower are really the vehicle to their survival. Both lenders and mortgage brokers post prices with loan officers, which those loan officers than offer to consumers.
What this means is that loan officers usually have little say in the prices they are offering and therefore can not help a borrower who is looking for more competitive pricing They are like middleman, which means bargaining with them can be a very frustrating process indeed.
Lenders are further distinguished as mortgage bankers or portfolio lenders. Mortgage bankers usually end up selling all the loans they make in the secondary market because they don't have the long-term funding. These banks, however have actually come to dominate the US mortgage landscape, even if many of the larger mortgage banks, such as Chase Manhattan Mortgage and Wells Fargo Mortgage, are affiliated with large commercial banks.
Portfolio lenders, on the other hand, consist of commercial banks, savings banks, savings and loan associations, and credit unions.
Is a Mortgage Lender Even the Best Option for You.
Any shopper who is reasonably astute would probably be better off dealing with a mortgage broker than with a mortgage lender.
Mortgage brokers deal with multiple lenders and can therefore find you the best prices out there on any given day. They know what doors to knock on and what loans to avoid. But they can also be sharks, something you are less likely to find when you go to a mortgage lender directly.
Knowing whether to go with a broker or mortgage lender usually depends on how well you are at judging characters, which isn't always easy in the housing market.
