This week, we bring you the truth about three main types of lenders. When seeking information about a home loan, some people believe their only recourse is to deal with their own bank. This is untrue!
We think you should know you have several options when you are considering a loan. Below, we will name and describe the three main types of lenders, all of whom are called, “Mortgage Companies.”
Lenders: Do Your Homework about Mortgages and Lenders
Three Types of Lenders: Pick the One that’s Right For You.
House-hunters learn the term lender almost as quickly as they begin their research into the mortgage process.
That term,however, is a highly generic one.“Who exactly is the lender? What kinds of institutions are we actually borrowing from? Are all lenders the same?”
Your home is the largest purchase you will probably make in a lifetime. Since your mortgage payment is the largest part of that commitment, Palm State Mortgage professionals hope you take the time to learn about the kinds of lenders and loan professionals available to you.
Do not feel compelled to go to your local bank simply because the loan officer there is a known entity. You can search for the right mortgage professional, and this blog defines the three major types available.
Type I: Lenders Whose Names You Probably Know: The Retail Banks
It is true that the local bank can underwrite, approve and close your home loan. Retail Banks include companies ranging from the “biggest name-brand institutions down to smaller local banks and credit unions.”
Retail banks “either keep the loans on their own balance sheets or sell the loans to investment firms, Fannie Mae or Freddie Mac, who bundle the loans into mortgage bonds, aka mortgage backed securities (MBS).”
One thing is certain about the retail banks. They have big names and big advertising budgets. They also do a lot more than mortgages. These businesses bustle with numerous financial products. As you probably know, they offer checking accounts, credit cards and financial planning.
Lenders Type II: The Mortgage Banks
Just like your little local bank on the corner, the Mortgage Banks can underwrite, approve and close your loan.
After the deal they will sell the underlying loan to retail banks, investment firms or Fannie Mae or Freddie Mack, and the loan gets bundled into MBS. Servicing the loan might also be sold right along with the loan, so you would deal with a new bank servicer on any future issues or business concerning the loan.
Lenders Type III: Mortgage Brokers (Like Us!)
Retail Bank Lenders: Your most familiar financial institutions, but are they best choice for your home mortgage?
Like Palm State Mortgage Company, Mortgage Brokers are companies who obtain loans for you through retail banks or mortgage banks. Likewise, the loan is funded and usually also serviced by the best retail or mortgage bank for your special fiscal situation.
In 2013, we explained in the Palm State Blog, that the Mortgage Broker works for you, the client, whereas the loan officer works for the bank that hired him or her.
As we stated then, “On the one hand, the mortgage broker acts as a channel between the borrower and many lenders.”
This holds true in 2017, and it means we can investigate many lenders and many types of loans. We will help you choose the best lender for your situation.
On the other hand, the bank loan officer works for the bank who pays his or her salary.
Mortgage brokers are loan specialists who clearly understand all the new regulations. We respect the details of the somewhat daunting paperwork involved in a loan. The fact that mortgage brokers are specialists here at Palm State Mortgage Company, is becoming more and more distinctive and attractive.
We promise not to try to sell you a checking or savings account by offering you a lower mortgage rate. (We’ll leave that kind of product bundling to the Retail Banks and Mortgage Banks.)
The Truth about What Type III Does For Clients!
Lender Type III: We might be small, but we are secure, and we work for you!
Now you know the three main types of mortgage lenders. We, as mortgage brokers, know how to shop among all types of lenders for the best rates for you. Knowledge of lenders, brokers and bankers and the types of loans available “out there” will empower you to make the right decisions as you attain your dream of home ownership.
We understand how self-revealing and intimidating the process of attaining a mortgage can be, and we are here to help. We assist you through the procedures and the papers with professionalism and confidentiality.
In central Florida, we are knowledgeable experts who have been here, paving the way to our clients’ best home mortgage situations since 1989.
Bankers vs. Brokers–Did You Know…?
- Mortgage Brokers Are Licensed! We have licenses from the state as well as the federal government.
- Mortgage Brokers of Today Must Be Transparent! Mortgage Brokers adhere to many rules regarding full disclosure. For example, Palm State Mortgage will explain all of all the details and fees concerning your loan. We will help you choose the lender who is right for you.
- Mortgage Brokers Work for the Client: Sometimes we can even find new mortgage products or special institutional discounts that other types of professionals don’t have the time to research.
