If you’re like most people, you need to borrow money in order to buy a “Client Name” home. Once you’ve determined how much home you can afford, you’ll shop for a mortgage. You can speak with a mortgage broker, who will tell you what types of loans you’re eligible to receive and help you apply for them, or you can talk to your bank or another lending institution.
Before you start shopping for a mortgage, you need to know where to look.
Mortgage brokers are companies or individuals who connect borrowers with lenders. They facilitate the loan process, which means mortgage brokers are intermediaries in your transaction.
Working with a mortgage broker might be helpful if you don’t have time to shop for a mortgage or if you don’t know enough about lending to make sound decisions. Your mortgage broker will evaluate the types of loans you may be eligible for, and he or she will let you know which banks or lenders have the most favorable terms and rates for your situation.
However, you’ll often have to pay an initial fee or a commission once you obtain your loan if you work with a mortgage broker.
Mortgage bankers are large lenders. They create loans and pools of loans that they sell directly to lending institutions, such as banks.
Programs such as Fannie Mae, Freddie Mac and Ginnie Mae buy loans from mortgage bankers.
Also known as direct lenders, mortgage companies fund their own loans or purchase them from mortgage bankers. When you borrow money from your banking institution or credit union, you’re borrowing from a direct lender.
Many real estate brokerages have their own in-house mortgage lending businesses, but you are not obligated to use them. You have the right to shop for the best terms on your mortgage. If you need help getting started, ask your Realtor® where to turn.
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