Let’s talk lenders—specifically mortgage lenders. Lenders can be found online by quick google searches but most people use word of mouth because it is easier to use someone that has been recommended because it means that they are good at what they do. But did you know that there are three different type of lenders that you can use?
The most common lenders are mortgage bankers and brokers. These lenders have access to different loans and several different type of loan programs. This allows them to shop around for the best mortgage rates and terms possible, which makes it easier to tailor the loan and the terms to each individual person/couple. These lenders sometimes charge processing or origination fees (an upfront fee that is charged by lenders to process a new loan application.) These types of lenders are companies like Quicken Loans, Rocket Mortgage, and AmeriSave Mortgage just to name a few.
The next type of lender is a direct lender. Now these are your local credit unions or banks. These types of lenders are generally able to work in all 50 states. Many borrowers prefer to work with lenders that they have done business with before because it gives them a more personal relationship and having a long standing relationship will give them a better chance at getting approved for a better, or bigger, loan amount. BY working with direct lenders, it makes the process go faster, but the downfall to this is that these lenders can’t shop around the way a broker can.
Finally, we have secondary market lenders. These lenders are Federal National Mortgage Association (FNMA or Fannie Mae), Government National Mortgage Association (GNMA or Ginnie Mae) and Federal Home Loan Mortgage Corporation (FHLMC or Freddie Mac). These lenders receive their funds from a secondary market lender. By using secondary lenders, it allows the national mortgage market to move money easily between different states.
These lenders are all over the country. When you need to shop for a mortgage make sure that you know what type of lender you are getting involved with and that you have shopped around for the best options available.
