Mortgage Lenders

Mortgage lenders are often the difference between getting the home of your dreams or watching it slip away. These companies will loan you money to purchase your house or property and allow you pay them back over a period of time.

What is a Mortgage Lender?

A mortgage lender is the company that loans money to buy a house. Many times, this may be your local bank or credit union. There are also a growing number of financial institutions that specialize in providing mortgages.

In theory, once you sign with a mortgage lender, you’ll be sending that company a check every month for the life of your mortgage. In today’s market, however, mortgages are often sold between companies. There’s a good chance that the company you sign with at your real estate closing will not be the same one you are paying at the end of your loan. When lenders sell mortgages to one another, the terms of the mortgage should stay the same. The only difference you may see is the address where the check is sent.

Working with a Lender

To make your offer on a house more attractive, you’ll want to have a mortgage pre-approval letter. This is your first opportunity to work with your prospective mortgage lender. Try working with several different mortgage lenders to find the one you’re most comfortable with, and ask questions about their service. Just like buying a car, it’s important to know what your mortgage options are and to compare interest rates for similar loan terms. If you compare the interest rate for a 30-year fixed-rate mortgage to a 15-year adjustable rate mortgage may yield significantly different results for an unequal risk potential.

You can also use a mortgage broker to help find the right lender. A mortgage broker usually works for an independent company that will compare current mortgages for you and help you decide which one to take. Some brokers may charge fees for their services so ask them upfront how they get paid.

Types of Mortgage Lenders

There several types of mortgage lenders in business today, including:

• Banks and credit unions: Your local bank will usually offer mortgages or can serve as a broker. You may feel more comfortable working with an organization you’re familiar with, but be aware that many small banks sell their mortgages to other companies.
• Mortgage banks: These direct lenders are often branches of larger institutions, like Countrywide and Wells Fargo. Because mortgage banks administer the loans and handle all the paperwork in their office, the process can move quicker.
• Wholesale lenders: Wholesale lenders work through mortgage brokers. They often lower the price of their loans to allow the broker to increase his commission without passing the increase along to the consumer.
• Portfolio lenders: Usually offered by large savings and loan companies, portfolio lenders loan money without expecting to sell the mortgage to another company for at least a year.
• Online mortgages: Applying for online mortgages is a relatively new venture, but many prospective homeowners are making the leap. Online mortgages are often offered by traditional lenders through their websites. Since there is no live person to answer any questions you have, purchasing a mortgage online is best left to experienced homebuyers.

Choosing a Lender

After checking out several mortgage companies, deciding which one to accept can be a daunting task. However buying a home is probably the most expensive investment you will make, so take your time deciding who will help you finance it. Although the amount of your monthly mortgage payments is an easy to compare factor, hidden fees and points can cost you more at closing. Some things to consider:

• The bottom line: Look at the entire financial package related to your mortgage. Ask to see a list of all closing costs, late charges, interest rate changes, prepayment penalties, and broker fees.
• Don’t be pressured: A more expensive home means higher monthly payments and more money for the mortgage company. Decide how much you are willing to spend on a home before talking to the mortgage company. A lender may approve you for a larger loan than you are comfortable with or need, but that doesn’t mean you have to take it.
• Ask around: Ask your family and friends for the names of mortgage lenders that they would recommend.
• Be an educated consumer: Watch your newspaper for offers on special interest rates and check the Internet, then ask a local lender if they can match it.

• List of Popular Mortgage Companies
• FHA Loan Guidelines
• Amortization Table

• FHA Mortgages and Home Inspection Requirements
• Help for Single Moms to Buy a House
• Escrow
• FHA Debt to Income Guidelines
• Free Home Inspection Forms

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