Type of Lender

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.