When considering a mortgage, one of the most challenging decisions is choosing a mortgage lender. You want to ensure you get the best terms, rates, and conditions, especially since you are taking out a significant loan.
There are a variety of mortgage loans and lenders available. So, how do you know which is right for you? In this article, we’ll discuss different types of mortgage lenders, so you’ll know which is right for you.
Mortgage Lender vs. Mortgage Broker
When you’re looking for a mortgage, you’ll come across the terms mortgage lender and mortgage broker. What’s the difference? A mortgage lender is a direct party that offers you a loan. Mortgage lenders check your credit score and financial circumstances to determine what you qualify for when applying for a loan. Once your loan is initiated, you make payments directly to the lender to keep your loan in good standing.
On the other hand, mortgage brokers are not a direct source of your mortgage loans. Instead, they work with other lenders to help you find suitable mortgage options for your needs. A mortgage broker gathers all your financial information and enables you to find the most favorable conditions and terms for your mortgage. They simply act as an agent between you and the available lenders.
Now that you understand the difference between a mortgage lender and a mortgage broker let’s look at the different types of available mortgage lenders.
Wholesale lenders do not deal with the borrower directly. Instead, they will only deal with borrowers through a mortgage broker, credit union, or another bank. A wholesale lender offers affordable rates to mortgage brokers, credit unions, and banks to help them meet the needs of their clients. The third-party between the wholesale lender and borrower acts as an agent who makes a commission from the loan.
A retail lender deals directly with the borrower and lends money directly to the undersigned. Mortgage bankers, credit unions, banks, and loan institutions are typical examples of retail lenders.
A mortgage banker is a company or a lender party that offers loans with their funds or funds borrowed from a larger warehouse lender. A mortgage banker deals directly with the borrower and approves or denies the application based on their terms and conditions.
A portfolio lender loans their own money to a borrower without any interference from another party. They maintain these loans in their portfolio. This is a good option for commercial borrowers or borrowers who have a significant financial history.
Hard Money Lenders
Hard money lenders are private lenders that typically offer loans with high interest and down-payment rates. These lenders are only approached for short-term loans and are also more familiar with commercial clients.
For More Advice on Your Refinancing Options, Contact All American Financial Services
If you want to discuss your options with a Lancaster refinance expert, All American Financial Services is here to help. Contact us today to schedule an appointment with one of our financial experts and discuss which lender is best for your current financial circumstances.