- advertisement -
 

CHAPTER VI -- KNOW THY LENDER

 

LESSON 11: LOAN SOURCES -- BANKS, BROKERS AND INTERNET LENDERS

So now that you're a mortgage expert, it's time to start shopping for a loan. But where do you turn? What should you expect a lender to ask when you apply? What do mortgage professionals look at when deciding whether to give you a loan? That's what we'll review in the next several lessons.

But first, let's talk about who will lend you money. It used to be that when you applied for a mortgage, you did so at the local bank or savings and loan where you kept your checking and savings accounts. Today, though, borrowers have a wide range of choices. Consumers can apply with mortgage brokers, mortgage bankers, credit unions, thrifts, state and regional housing agencies, financial services firms that manage mutual fund investment accounts, home builders, real estate agencies and online lenders, among others. Here are some of the most common sources of mortgage money:

- advertisement -

Mortgage banks:A mortgage banker is the lender -- the one making the loan directly. These companies make the ultimate decision on whether to loan you money and they typically sell their loans off into the secondary market after making them.

Mortgage bankers present you with only their programs, so you should speak with several to comparison shop effectively.

Mortgage brokers:A mortgage broker serves as a matchmaker between a homebuyer and lender. The broker works with several lenders, each of which offers different kinds of mortgage programs. A broker will gather information from a borrower about the borrower's credit, income, assets and the like, wade through his pool of funding sources and find the best lender and loan program for that customer. Think of brokers as retailers who sell goods provided by wholesalers. In this case, the "goods" are loans provided by lenders. Once a broker makes a loan, the borrower usually deals with the lender whose money is being borrowed or the loan's mortgage servicer from there on out.

Benefit A mortgage broker shops across lenders with the goal of getting you a better mortgage rate than you can get for yourself by going to a single bank and applying for a mortgage.
Drawback There are plenty of opportunities for the mortgage broker to improve his or her profit margin on your loan at your expense, so you need to know enough about the process to protect your interests.

Regardless of whether you use a mortgage broker or a bank, you can review rates in your market by using Bankrate's mortgage search.

Banks, thrifts, credit unions:These financial institutions generally have one menu of products just as mortgage banks do. They may hold mortgages in their portfolios and collect borrower payments after closing, but many sell their loans into the secondary market, too.

(continued on next page)

 
 

TABLE OF CONTENTS

CHAPTER I
  Lesson 1
  Quiz

CHAPTER II
  Lesson 2
  Quiz

CHAPTER III
  Lesson 3
  Lesson 4
  Lesson 5
  Quiz

CHAPTER IV
  Lesson 6
  Lesson 7
  Quiz

CHAPTER V
  Lesson 8
  Lesson 9
  Quiz

CHAPTER VI
  Lesson 10
  Lesson 11
  Quiz

CHAPTER VII
  Lesson 12
  Lesson 13
  Lesson 14
  Quiz

CHAPTER VIII
  Lesson 15
  Lesson 16
  Lesson 17
  Lesson 18
  Quiz

CHAPTER IX
  Lesson 19
  Quiz

CHAPTER X
  Lesson 20
  Quiz

CHAPTER XI
  Lesson 21
  Quiz

CHAPTER XII
  Lesson 22
  Lesson 23
  Lesson 24
  Quiz

CHAPTER XIII
  Lesson 25
  Lesson 26
  Lesson 27
  Quiz

CHAPTER XIV
  Lesson 28
  Lesson 29
  Lesson 30
  Quiz

Definitions





RELATED STORIES

Mortgage brokers can help you or or hurt you

Protecting yourself against mortgage scams and foul-ups

Builders tout one-stop shopping for buying and financing new homes

Bargains still plentiful in online-lending land


Robo-mortgage: The automated future of home buying

Shop rates and fees, but don't allow all the lenders to pull your credit report

Your mortgage broker to-do list

 
- advertisement -