When you’re applying for a home loan, you’re typically doing so through 1 of 3 types of mortgage lenders. You’ll hear a lot of different terms thrown out such as mortgage banker, broker, lender, etc. so while they’re all referring to the same basic type of transaction – initiating a home loan or refinance – they all have different internal structures. Here’s a quick overview of the types:
Mortgage Banker
A mortgage banker is a large lender who originates loans with their own money, then sell the loans directly to Fannie Mae, Freddie Mac, Ginnie Mae, investors, and others. Some may service their own loans, but not all of them will. These include Bank of America, Suntrust, GMAC, Citi, etc. They have lots of control since it’s their money, bu they have no flexibility since they generally have one set of rates and guidelines to offer.
Mortgage Brokers
A mortgage broker is a company that originates loans with the intention of selling them to wholesale lending institutions. The broker does not lend their own money, but they can choose from several sources often looking for the lowest rate. They have no control but lots of flexibility in loans.
Correspondent Lenders
Mostly referred to as a mortgage lender, this type is a combination of the two mentioned above. They are smaller lending institutions who fund using their own money or credit then sell the loan for servicing once the loan has closed. They can shop the mortgage around in order to find you the lowest rate. They have the most flexibility and control over the process. Correspondent lenders include places like Intercoastal Mortgage and 1st Mariner Bank. These two are the ones I refer my clients to.