The home buying process is positively full of choices. At times, too many. Narrowing your sights on the right home can seem like enough choice to occupy yourself with. But when it comes to the choices you make while purchasing a home, choosing the right Maryland mortgage lender is right up there. Because the decision about who you trust your mortgage to is one that will affect the next 30 years of your life. So, of course, you want to select the right one. Let’s take a look at some steps you can take to ensure you work with the mortgage lender that’s best for you.
The Different Types of Lenders
To start with, it’s best that we first identify the different types of lenders you have to choose from. The style of lender you select is dependant on your specific financial needs, and also personal preference. Let’s take a look at what’s on offer.
First, we’ll clear up a common misconception. Mortgage brokers are a valuable asset (see our next section), but they do need to. be differentiated from mortgage lenders. Mortgage brokers work on your behalf to secure loans from lending institutions. Brokers have connections across the industry that allow them to secure favorable rates, and certain types of lenders only work through brokers to offer their loan services. Brokers either charge you or the financial institution a portion of the final loan amount.
Mortgage bankers are one of the most common types of Maryland mortgage lenders you will come across. Mortgage bankers either lend directly to you through their institution or secure a loan from other institutions but utilize their own resources. Essentially, this means a mortgage banker is affiliated with financial institutions, and regardless of where the loan comes from, the mortgage banker’s institution name will be the on the loan. There are generally two types of mortgage bankers, direct lenders and retail lenders
Retail lenders are probably the large national chains you think of when considering. a mortgage. These are typically large financial institutions, though they can be local banks and credit unions as well. Retail lenders are differentiated from direct lenders by providing other services and loan types, such as banking account services and car loans, among others.
Direct lenders can also be financial institutions, or sometimes, arms of bigger financial companies. While the mortgage services are largely similar, the difference is that direct lenders are companies focused solely on mortgage lending.
When your loan closes, many institutions will sell it on the secondary mortgage market to federal mortgage firms like Fannie Mae or Freddie Mac. Portfolio lenders, on the other hand, retain your loan in their portfolios directly. Because loans sold on the secondary market may have to meet certain requirements to be sold, they can be more stringent with the qualifications you need to meet. Portfolio lenders may be able to offer options such as a lower required credit score or higher debt-to-income ratio allowed.
Wholesale lenders don’t work directly with you as the consumer. Instead, they offer their loan services through third parties, such as mortgage brokers or credit unions. While these loans are facilitated by another party, the wholesale lender is who determines the loan requirements.
Wholesale lenders are a prime example of how when you’re searching for Maryland mortgage lenders, it’s in your best interest to work with a qualified broker. Brokers have knowledge of the industry and connections with other financial institutions and lenders. It helps you explore every available option to choose one that is right for you. The team at Federal Hill Mortgage has helped hundreds of families finance their dream homes. We’d love to help you next. To get started, contact us today.