Types of Mortgage Lenders
What exactly are Mortgage Lenders? A mortgage company is an entity or individual you turn to when purchasing a residential property. A mortgage agent is an individual or business that provides home loans from many different lenders to customers. Most people turn to mortgage companies when they want a large home loan because of the many other lenders and programs they can find through the agencies. However, some individuals do not even know the names of any of the companies. In this case, they will turn to the internet to research companies.
For the people who have no idea what these mortgage lenders are, let us take a look at some of the major names in the industry. The two most popular companies are Bank of America and Countrywide. Both of these lending institutions are very large and have been in the lending field for over forty years. Although both companies do not have bad credit mortgages, they do tend to give customers lower interest rates than other companies.
Another name you will often hear referred to as mortgage lenders is mortgage brokers. Mortgage brokers do not deal directly with the customer, but instead they find borrowers and work with those borrowers to find them the best loan terms. They can also be referred to as mortgage brokers because they will sometimes act as representatives for a lender, showing the customer the offers and making recommendations to a customer based on their score. These brokers can also sometimes refer customers to mortgage lenders on their own behalf, but they do not have the final say on who will get the loan and whether the client will qualify for it.
Mortgage companies are broken down into two main categories: Government sponsored mortgage lenders and commercial mortgage lenders. The government backed mortgage lenders are made up of the Department of Treasury, the Federal Housing Administration, the Federal Deposit Insurance Corporation, and the Federal Reserve. These companies provide mortgage loans to a wide variety of buyers. Commercial mortgage lenders are banks, credit unions, and non-traditional lenders such as corporate banks and brokers. These companies specialize in providing home loans to small businesses and individuals.
Although there are hundreds of mortgage companies and brokers to choose from, the two main types are FHA or first-time buyers, and Commercial/insured banks. One thing to keep in mind is that not all mortgage companies or brokers offer government-backed loans; in fact, many will not even offer government loans. When choosing a mortgage company or broker, always ask about the lenders guarantee to back up their stated offer. The first-time buyer program is run by the FHA, but there are other mortgage companies that offer government-backed loans, such as GE Capital. There are also banks that offer government-backed loans; however, these banks tend to be much larger and have more government connections and customers.
FHA Home Buying Programs: While FHA does not directly provide home loans, they do help homeowners apply and qualify for them. FHA works with private mortgage lenders that specialize in first-time down payment assistance. As part of their service, FHA insures the mortgage of the buyer and pays the lender if the loan goes into default. To qualify for the service, borrowers need to own or rent a home, and need to have been paying a minimum percentage of their gross income to date. FHA guarantees that mortgage lenders will work with them, and that the mortgage will be repaid if the borrower defaults.
Commercial/insured banks: These mortgage lenders tend to be larger banks or trustworthiness institutions. These banks may not participate in the program. Commercial/insured banks may take a variety of forms, such as lending to consumers, commercial real estate, or businesses. Many of these banks work with third-party commercial mortgage lenders. A few of these types of banks include Trustmark, Bank of America, and Wachovia. Trustmark and Bank of America are often considered to be” suffix banks,” while Wachovia is considered a” prefix bank.”
Broker networks: These mortgage lenders may work directly with customers. They work directly with the borrowers instead of working through a third-party intermediary such as FHA or Trustmark. These companies do not participate in any programs from government or other bodies. These companies include Collateral City, Trustmark Financial and Trustnet.