A mortgage lender is a crucial component of buying a new home. But there are also mortgage brokers, as well as several varieties of lenders and brokers. So how can you tell what you need to know about each position? Read on as we try to break it down for you, and to make your home buying process a little bit easier.
What a Mortgage Lender Does
Mortgage lenders are licensed professionals who lend you money either directly or through a third-party to fund your loan. Lenders will have various names based on how they acquire their clients, and what they do with your loan once it is funded.
Retail, Wholesale, and Correspondent Lenders
These mortgage lenders reach out directly to customers. Retail lenders can also be known as “direct lenders.” Retail lending can take place face-to-face in a bank, online, or over the phone.
These mortgage lenders fund mortgages acquired through brokers who work outside of their company. The brokers will find customers and take loan applications, then sell these applications to wholesale lenders to fund.
These lenders are a mix between brokers and retail lenders. They can technically fund loans with their own borrowed money, but typically lock in rates with other lenders simultaneously. This can mitigate their risk because they can quickly turn around and sell the loan.
Mortgage Bankers vs. Portfolio Lenders
These professionals will fund loans but often turn around and sell them in the secondary market to investors or agencies. Mortgage bankers will borrow money from banks to fund loans and then repay when the loans are sold. Most large lenders are mortgage banks.
Portfolio lenders can include community banks, credit unions, and savings and loan companies. These lenders use money from their customers’ bank deposits to fund loans so that they can keep the loans in their portfolio.
What a Mortgage Broker Does
A mortgage broker helps to match borrowers with lenders. Mortgage brokers will review your personal financial information and look through mortgage lenders to try and match you with one who can give you the best rate and terms. This can be helpful because the broker often has lots of lenders with which to match you. However, once the match is made, the broker is less involved.
A Title Company You Can Trust: Colony Title
At Colony Title, we will help you through the process of getting your property’s title and help you avoid the pitfalls of hidden costs while you buy your home. We are also well trained in identifying any and all errors in public records and helping you resolve them. We specialize in real estate title insurance in both Maryland and Washington, D.C., and we will perform an expert title search, check through all past documentation, and examine records for any fraud or forgery. For more information on how we can get you into the home of your dreams, contact us online or give us a call at (410) 884-1160. To get more updates on housing markets and how to get into your home, follow us on Facebook, Twitter, LinkedIn, and Google+.