Buying the American Dream: Choosing a Mortgage Lender

By Emily Kerr
LoanPage Columnist

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Your home is your castle. But before you move the dragons out and lower the drawbridge, you're going to have to figure out how to finance your home. Shop and compare not all mortgage lenders are alike.

The dream: to own your own home.

The reality? You're going to need a home loan.

Choosing a Mortgage Lender

The primary institutions for home loans and mortgages are mortgage bankers, mortgage brokers, savings and loan associations and credit unions. Seller financing is another option.

Mortgage Bankers

Mortgage bankers manage home loans. They find the money, underwrite the home loan and sell it to the secondary market at a profit. Sometimes mortgage bankers service the loan, collecting monthly payments, sending out home loan statements, collecting late payments. Mortgage bankers can find the best mortgage rates between competitive lenders by shopping home loans among lenders.

Mortgage brokers

Mortgage brokers do not underwrite home loans; they specialize in putting together lenders and borrowers. Because they work with multiple lenders, they're usually able to find very competitive rates. Mortgage brokers are paid on commission to match buyers who need to borrow with lenders who want to loan.

Savings and Loan

Savings and loan associations accept savings from private investors and provide home mortgage services to the public. They're the largest traditional lenders for mortgages in the U.S.

Credit Unions

Credit unions are banking entities owned by their members which offer very competitive rates on mortgage loans to their members. Like most mortgage lenders, after processing your loan they'll sell it to the secondary market and use the proceeds to offer more mortgage home loans to other members.

Assumable Mortgage

Seller financing is also sometimes called an assumable mortgage a home mortgage held by the seller and taken over or assumed by the buyer when the home is sold. Seller financing gives home buyers a chance to obtain a mortgage they might not otherwise qualify for, and generally there are lower closing costs. If you want the best mortgage rates, you'll need to find the best lender. Shop around and compare.


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About the Author

Emily Kerr is a freelance writer with over 425 articles in print. She writes about topics from home financing to home construction.

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