Who
are the sources for loans?
Firstly, it is important to understand
who has the money to lend. Here are some of the most common sources
for loans:
Mortgage Bankers
A mortgage
banker both originates and closes on the loan with his own name and
with his own funds. Once you closed on the loan, the same company
might service your account, collect payments and make sure your real
estate taxes are being paid. The company may also sell your loan on
to the secondary market and then re-lend the money. Mortgage bankers
make their money on actually making the loan where you pay fees and
points that the banker pockets.
Mortgage Brokers
A mortgage
broker is more of a middleman. The broker takes the loan
application, processes the paperwork and submits the loan to a
lender who underwrites and closes on the loan. Mortgage brokers
usually work with a variety of lenders who buy loans on the
secondary market, providing mortgage bankers with an almost
inexhaustible supply of money. With this money, a mortgage broker
can make new mortgages and a variety of packages.
Credit
Union
A Credit Union can be an excellent source
for a loan and the interest rate can be lower for members. Many
companies operate their own credit union so check out your workplace
and open an account.
Savings and Loans
This is
another very common source for loans. It actually provides more than
half the loans in the United States.
Builders and Developers
This option, if
available, allows the purchase and finance of a home to take place
in one step.
Government agencies
These agencies do
not actually give loans; however, they back or insure loans.
Remember that a conventional loan is backed by bankers. This is to
say they are secured by the lender. A government backed loan is
secured or backed by the government; however, it is still a lender
who makes the loan. This makes the lender more attractive to the
lender.
