The different types of home mortgage lenders

Here are the basic differences between the variety of lenders that you can consider :

Commercial Banks
  • More widely trusted by many borrowers because of their stability.
  • Tend to have higher rates than some other mortgage lenders.
  • May not have the widest selection of products.
  • Fast turnarounds and consistent underwriting practices.
Savings Associations/ Federal Savings Banks/ Thrifts
  • Focused on mortgage lending and offer a wide variety of loan products.
  • May have more flexible underwriting standards.
  • Depending on whether they sell loans on the secondary market or keep them as portfolio loans, credit availability may vary.
Credit Unions
  • Only available to members of the credit union.
  • Underwriting standards can be fairly rigid.
  • Products are limited to the basics.
  • Rates are usually very competitive since credit unions pass their profits back to their members.
Mortgage Bankers and Brokers
  • Aggressive in underwriting and rates.
  • Loan officers work on commission, so they tend to work harder for their clients.
  • Borrowers tend not to trust these lenders as much, because they do not have big, household names.
  • Underwriting standards are set by the secondary market, so they may be less flexible in taking mitigating circumstances into consideration.
  • Brokers will have the widest selection of products since they can place products with a variety of lenders.
  • Borrowers must take into consideration additional brokerage fees.

 

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