So a bank, a mortgage broker, and a mortgage banker walk into a bar…
Nah, that joke was not going to work. But if you’re wondering about the differences between mortgage lenders, I can help spell out some of the differences in how they operate.
Let me start by saying that almost all mortgage loans will be transferred and sold after closing. That is the purpose of institutions like Fannie Mae and Freddie Mac. They buy mortgages from lenders and either hold those mortgages or package them into mortgage-backed securities that may be sold again.
The majority of banks will sell their loans after closing, especially if they’re standard conventional loans. However, there are such things as “bank loans,” which means the bank will lend money and then will keep that loan in their portfolio and never sell it. Banks offer home loans and of course, numerous other products to help you manage your money. They usually have a separate department that deals with mortgages.
A mortgage broker will use a bank or a mortgage broker (see below) to underwrite and close the loans they make. That means the broker is utilizing the services of another institution at closing. The money is sent either by the bank or the mortgage banker that the broker is trying to sell the loan to.
A good mortgage broker does their own prequalifying and takes the loan application of their client. They will process the loan, but then they normally use the underwriting and closing departments of the institution they’re trying to sell that loan to.
A mortgage banker tends to have a big line of credit to use for their loans. They process and underwrite their own loans. They then close the loans, and after closing, sell them. It’s an institution, like a bank, but that only does mortgages. They have their own prequalifying, loan application, processing, and underwriting departments.
Because they do the whole shebang and use their own resources, they have more control over the entire process.
That’s us, by the way. We’re a mortgage banker. That means we specialize in mortgages. We can’t mess this up because we can’t afford to! This is all we do, and we’re good at it.
If you have more questions about different types of lenders or the loan process, call us at (205) 986–4220, find us on social media, or visit our website. We’re happy to answer your questions and get you pointed in the right direction.
— Ben Chenault,
Certified Mortgage Planner
MortgageBanc / Fairway Nmls# 2289
Copyright©2019 Fairway Independent Mortgage Corporation doing business as MortgageBanc. NMLS#2289.4750 S. Biltmore Lane, Madison, WI 53718, 1–866–912–4800. All rights reserved. This is not an offer to enter into an agreement. Not all customers will qualify. Information, rates and programs are subject to change without notice. All products are subject to credit and property approval. Other restrictions and limitations may apply. Equal Housing Lender. Licensed by the Department of Business Oversight under the California Residential Mortgage Lending Act, License No 41DBO-78367. Licensed by the Department of Business Oversight under the California Finance Lenders Law, NMLS #2289. Loans made or arranged pursuant to a California Residential Mortgage Lending Act License. Georgia Residential Mortgage Licensee #21158. Licensed Nevada Mortgage Lender.