A Mortgage Lender is a Mortgage Lender. Right?
If you’re talking about what happens at during closing process, when the mortgage lender shows up with the cash you need to buy your home, then the answer is yes.
But, the Columbus Dispatch reports, there’s actually a world of difference that exists between lenders - and knowing that difference and how it impacts you is very important.
Knowing how a mortgage broker, mortgage banker and traditional mortgage lender each operate can help you make a smart move with your money. When you’re buying a home, what could be more crucial?
A mortgage broker typically works with a number of end lenders, also called “investors” in the secondary-mortgage market.
They represent companies such as banks, S&Ls and institutional investors looking to invest in a mortgage, hedge funds, or even Fannie Mae and Freddie Mac.
Some mortgage brokers represent as many as 100 investors, although most represent a dozen or so. Each investor might offer 10-20 loan programs, which is why some brokers seem to have an infinite number of loans from which you can choose.
Today’s mortgage bankers also do a lot of what mortgage brokers do: They often have investors ready to buy their loans after closing.
But mortgage bankers also use their own money to fund your loan. They might keep these home mortgage loans in their own investment portfolios rather than selling them on the secondary-mortgage market.
If your lender keeps mortgage loans rather than selling them, the lender also will provide the loan servicing, collect your payments each month, credit your account, and make sure your real estate taxes and insurance premiums are paid from a realestate and tax escrow account.
Later, the lender might decide to sell your loan to another investor.
Is it better to use a mortgage broker or mortgage banker to get a loan? The honest answer is, it doesn’t matter if you choose based on experience, customer service and recommendations from people you trust.
The thing you shouldn’t do is chose a lender who offers the lowest rates. Without a doubt, mortgage interest rates are extremely important, but the open nature of today’s market means that competition will keep prices as low as possible. Be smart as you proceed!