If you have purchased properties in the past, you must have come across several terms such as mortgage lenders and mortgage brokers. Although many of you can make a guess when it comes to the basic differences between the two, there are still many of you who do not know even the meaning of these terms. It is needless to say that property dealing is a highly tricky process. Whether you wish to buy a property or sell one, it remains the same in both the scenarios. However, if you can find out more about such terms, things can get much simpler for you.
A Mortgage Lender
When you talk about a lender, it basically refers to licensed professionals who are responsible for giving you the monetary backup, either directly or through a third party, in order to fund your loan amount. You will come across several names for lenders. These names are mainly based on the way they acquire their clients and way they use your loan once it is funded.
Wholesale Vs Retail Vs Correspondent Lenders
The basic difference in these three types of lenders is mainly on the way they acquire their customers. When it comes to wholesale lenders, they normally fund various mortgages acquired with the help of brokers, who generally work outside their company. These brokers look for potential customers and collect all the loan applications, which they sell to these wholesale lenders in order to fund.
Retail lenders acquire their customers differently. They directly reach out to their customers. These type of lenders are also known as Direct Lenders. It is important for you to know that retail lending can easily be done face-to-face either online or over the phone or in a bank branch.
Correspondent lenders are a blend of retail lenders and brokers. Technically, they fund loans with the help of their own borrowed money. However, they also lock in rates with several other lenders at the same time. This reduces their own risk simply because they can turn around anytime and sell the loan.
A Mortgage Broker
Mortgage brokers work just like any matchmaking service providers. North Brisbane Home Loans main job is to match a lender and a borrower. Mortgage brokers do a thorough review of your personal financial situation and information. Based on this, they go through a list of potential lenders and try to match you with the best lender who can offer you the best possible rate and terms. The sole advantage of this is the wide array of choices. Mortgage brokers have a long list of lenders to match your profile with. However, there is also the disadvantage that once the match is successfully made, the broker vanishes from the picture. This may result in possible difficulty in staying in touch with the person who is funding and underwriting your loan.
You will come across several mortgage brokers when you search for one. Just make sure that you choose a reliable and experienced broker who can help you as much as possible in finding a good lender.
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