What are the Different Types of Mortgage Lenders?

1. What are the Different Types of Mortgage Lenders? Whether you need a first-time home loan or want to refinance your mortgage, choosing the right lender could save you time, efforts, and money. Finding the right lender can be intimidating and often confusing. With so many types of lenders and companies to choose from, it is difficult to figure out which is the best mortgage company for you. Shopping for the right lender in a crowded field is crucial. By understanding the differences among the most common lender options, you could be able to narrow down the field. Let’s take a closer look at the main types of mortgage lenders. Direct Lenders– Portfolio lenders or mortgage banks can be direct lenders. Unlike retail bank lenders, these lenders provide more flexibility in qualifying guidelines and have alternatives for borrowers with complex loan files. Direct lenders use their own funds and offer their own products. Warehouse Lenders– They offer short-term funding to help other mortgage lenders fund their own loans. Warehouse lenders do not foster direct interactions with customers. Until their clients like mortgage banks and correspondent lenders repay the loans, these lenders use their mortgages as a monetary deposit. Retail Lenders– This type of lender includes credit unions and mortgage bankers who provide mortgages directly to customers. They offer multiple products such as personal loans, savings accounts and auto loans to customers and tend to have strict underwriting guidelines.

2. Mortgage Bankers– A mortgage bank could be a direct lender or retail lender. In the U.S., most mortgage lenders are mortgage bankers which include large banks, credit unions, and online mortgage lenders. In order to fund the mortgages issued to customers, these lenders borrow money from warehouse lenders at short-term rates. Once a loan closes, the mortgage banker sells it to private investors or agencies for repaying the short-term note. Portfolio Lenders–They fund borrowers’ loan with their own money and set their own borrowing terms which may attract many customers. Portfolio lenders are not obliged to the interests and demands of various other investors. Correspondent Lenders– Correspondent lenders sell loans to sponsors who re-sell them on the mortgage market. They collect the fee from the loan when issued and quickly try to sell the mortgage to a sponsor. This helps them to make money and remove the risk of failing to repay the loan by a borrower. Finding the best mortgage company in Utah can be daunting. However, a thorough research and understanding of various lender options help you start the process with more confidence. Original Source: https://hubpages.com/money/What-are-the-Different-Types-of- Mortgage-Lenders