Who is a Mortgage Lender?
Mortgage Home Lenders are licensed professionals, and they provide you the cash either directly into your account or through a third-party to fund your mortgage loan. Moneylenders fall in various categories depending on how they get their customers and after your loan is funded what they do with it.
Wholesale vs. Retail vs. Correspondent Money Lenders
- Wholesale money lenders fund mortgages that are brought in by brokers who usually work on their own. Those freelance brokers find consumers and take their loan applications, and afterward, they sell those applications to the wholesale money lenders to fund them.
- Retail money lenders directly reach out to customers. Such as, all loan origination functions are executed within the branches of Wells Fargo by their loan officers. These retail lenders are also known as “Direct Lenders.” The retail lending can be performed in a bank branch face-to-face, on the phone, or online.
- A mix among retail lenders and brokers are known as “correspondent lenders.” These lenders fund loans technically with their own money; however, they lock in interest rates with other lenders at the same time. Doing that alleviates their risk as they can swiftly turn around and sell the loan.
Portfolio Lenders vs. Mortgage Bankers
- Portfolio lenders typically consist of many credit unions, community banks, and savings and loan companies. These lenders use cash from the bank deposits of their customers to fund loans, and by doing so, they can keep the loans and also keep them in their portfolios.
- Usually, mortgage bankers fund loans; however, they then sell those loans to investors or agencies like Fannie Mae and Freddie Mac in the secondary market. They typically borrow money from different banks to fund loans, and then when the loans are sold, they repay the money.
Mortgage brokers are like matchmakers: They match a borrower with a lender. They will review your financial information as a borrower and then search different lenders to match you with the best one who can offer the best interest rates and terms according to your profile.
The benefit of having a mortgage broker is that they provide you with a choice as they have the option of matching you with many lenders.
On the other side, the disadvantage of having one is that once you get your match with the lender, the broker’s work is over, and then you might have difficulty in coordinating with the person who is funding and underwriting your loan.
The main task of loan officers is to find new customers, help borrowers with how to select the best mortgage product, and complete loan applications. The loan officers usually make their income from commission on the loans. At Texas Trust Home Loans, our loan officers work on zero percent commission, so they always have your best interests at heart. To learn more about our loan process, please visit us at www.texastrustloans.com
Loan officers can also act as mortgage brokers if they also perform the processing and broker loans. These loan officers are also known as mortgage loan originators, mortgage consultants, mortgage planners, and home loan consultants.