Mortgage Lenders - Types of Lenders

One of the common misconceptions is that only mortgage bankers give mortgage loans. This is a common misconception because there are a lot of other types of mortgage lenders. There are home equity lenders, commercial mortgage lenders, and thrift lenders just to name a few. They also have differing lending guidelines as well. This is the reason it's important to do your homework before going to a mortgage banker.

There are three major types of mortgage lenders. There are the long-term, medium-term, and short-term lending guidelines. The long-term guidelines usually involve long-term fixed rate loans that are paid off over the life of the loan. Lenders use a variety of criteria to determine which loans are eligible for long-term Mortgages. This includes credit score, income level, employment history, and the number of previous short-term loans that have been paid off. For the most part, if you don't have a long-standing, fixed rate, and you are in good financial standing with your current mortgage then you should be able to qualify for one of their short-term loans.

There are three other main categories of mortgage lenders. One is "REO" mortgage brokers. These are the "run-around" mortgage brokers that most consumers fear of. Although they are not true traditional mortgage lenders, they do offer the best mortgage loans because they have access to hundreds of different mortgage lenders that would not otherwise consider lending you a loan. Because these brokers often have relationships with multiple different lenders, your interest rates will be higher than you would find elsewhere.

There are also "specialty" mortgage lenders. These are lenders that specifically deal with certain types of mortgages such as commercial loans, debt consolidation loans, or home equity loans. You can locate these lenders through your local mortgage broker or through the Internet. The nice thing about these lenders is that many different lenders may be contacting you at once; however, they may also ask for more paperwork than with a regular mortgage lender. This can cause a delay in getting your loan approved.

There are also "mail order" or "wholesale" mortgage lenders. These are the lenders that you can order your loan directly from without first going through a broker. These types of lenders typically only deal with large corporations or the larger banks. Because there is a lower cost involved with these types of lenders, they are often considered the "low-cost" lender. Because these types of lenders do not deal with as many different lenders, the interest rates are usually quite high.

Lastly, there are "warehouses" of mortgage lenders that are available online. These warehouses basically allow you to fill out an online application, select the type of mortgage you want, and see it get posted to hundreds of different lenders instantly. These websites often have a comparison tool so you can see the best loan offer to choose from right away. They can be a great way to get a mortgage quickly and without having to go through a mortgage broker.

The downside to using online lenders is that sometimes they can take longer to approve you than banks. If they do approve you, it may come after you have submitted your papers to more than one bank. Sometimes the reason can be, because you went to one bank and got rejected by another. This can happen with both local and online banks. For More information visit our office.

In conclusion, mortgage lenders can be divided into three groups namely banks, wholesalers, and direct lenders. Direct lenders deal directly with banks; however, they have lower interest rates. Banks can either be local ones or national chains. Wholesalers will deal with different companies such as financial institutions, credit unions, and other direct lenders. Finally, there are wholesale lenders who are basically like online loan agencies with an exclusive relationship with banks and other wholesale lenders.