Three Types of Mortgage Lenders You May Not Know Exist
In recent years, changes in the mortgage lending industry have led to greater restrictions and more competition. Some prospective home buyers find themselves left out of the game when it comes to traditional lenders like banks and credit unions. Fortunately, lesser-known lenders are stepping up to the plate to provide more options to those hoping to purchase a home.
Savings and Loan Associations
Savings and loan associations use the savings deposits of private investors to make mortgage loans, including new construction loans and refinances. They are typically locally-owned and managed, and are chartered by either the federal or state government. They are often smaller and less complex than large banks, since they participate in a narrower subset of financial processes.
Mutual Savings Banks
Mutual savings banks are thrift institutions, much like savings and loans, and they were originally created to serve low-income consumers. They differ from commercial banks in that they are permitted to borrow from the Federal Home Loan Bank System to make long-term, fixed-rate investments like mortgages.
Correspondent lenders act as something of a local liaison between mortgage applicants and large lending institutions like national banks. They employ their own staff to underwrite loans and achieve a high volume for the lenders they maintain relationships with, but their mortgage loans are funded by the larger, third-party institutions.
If you find yourself in the market for a mortgage, remember that the lending landscape is broader than many consumers realize. It’s important to choose a lender that best fits your needs as a buyer, and there are myriad options to explore. Experts recommend interviewing at least three different lenders face-to-face before committing, and a lesser-known type of lender may be just the ticket to landing the home of your dreams.
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