Selecting a trustworthy mortgage lender is as important as selecting the type of mortgage on which you decide. One should research this thoroughly. It’s a good idea to look for the lender who offers you the best mortgage interest rate with the fewest possible points. However, one shouldn’t blindly hunt for a low interest rate, one should also be sure to choose the lender who can provide the best service along with the best deal.

Types of Mortgage Lenders

Primary Lenders

There are several types of lenders:

• Builders and developers – If you are purchasing a newly constructed home, you may be able to finance your mortgage directly through the builder or developer. This can be an easy option, as it allows you to both buy and finance your new home in one fell swoop.

• Credit Unions – Your Credit Union can be a good source for securing your mortgage since interest rates may be lower for members. If your company operates a Credit Union, open an account and check out their home financing options.

• Government agencies – Although the U.S. government does not actually issue mortgage loans, they do insure or back loans. Just as a conventional loan is backed by a banking institution, a government-backed loan is backed by the Federal Government.

• Mortgage bankers – A mortgage banker originates AND closes on mortgage loans with his own funds. After you have closed on your loan, the same company can service your account, collect payments, and check that you have paid real estate taxes. This company may sell your loan to the secondary market and then use those funds to re-lend to other borrowers. Mortgage bankers make money on actually making the loan where the buyer pays the fees and points that formulate the banker’s profits.

• Mortgage brokers – A Mortgage brokers acts more as a middleman, or messenger. The broker takes the loan application, processes the paperwork, and submits the loan to the lender. The lender then underwrites and closes on the loan. Brokers often work with a number of lenders that purchase loans on this secondary market, providing mortgage bankers with a nearly endless source of money. The mortgage banker can then issue new mortgages and packages with these funds.

Secondary Lenders

Many mortgages get sold on the secondary market; the U.S. government has agencies in place that buy mortgage loans. The most important are:
• Fannie Mae – Federal National Mortgage Association (FNMA)
• Freddie Mac – Federal Home Loan Mortgage Corporation (FHLMC)
• Ginnie Mae – Government National Mortgage Association (GNMA)



If you receive notice from your primary mortgage lender saying that your mortgage has been sold, you will need to call the lender as, by law, he must give you a toll-free telephone number of the agency that is taking over your loan.

If you have good credit, you should have little or no difficulty in obtaining a mortgage with a fair interest rate from what is known in the industry as a ‘prime lender’. If, however, your credit scores are suffering from paying off student loans, identity theft, or frivolous purchases like a tricked-out jet-ski, you will need to be more wary. You could potentially be a target for unscrupulous lenders. ‘Sub-Prime’ or ‘Bad Credit’ mortgage lenders can swindle those who are “poor credit risks”. In order to compensate for the perceived higher risk, sub-prime lenders will charge high interest or allow the interest rate to vary (float). It is important to note, however, that not all lenders who offer mortgages to those with poor credit ratings are dishonest. That’s where a consumer’s own sense of character judgment is vital.

Be sure you read and understand all terms and conditions of your mortgage agreement. Ask questions; if there are terms or statements that you do not understand, ask your lender. You will not sound dumb; as a matter of fact, you will sound steeped in wisdom for questioning the more complicated points of your contract. Your attention to detail can alleviate any problems before they occur. You certainly do not want any surprises at your closing.

Our premiere lending partner’s knowledgeable and experienced representatives will explain all the terms and conditions of a mortgage to you. Fill out our free contact form to speak to a knowledgeable and experienced mortgage loan representative right now. Get the answers to any and all questions you may still have about your future mortgage and how you can earn money while securing one.