A mortgage lender is a person or company that loans money and takes a security interest in real estate. The lender can provide more than just real estate loans, but it is referred to as the mortgage lender when someone is talking about a real estate loan.
Mortgage lenders will vary in size and type: mortgage bankers are a type of mortgage lenders who originate loans and choose whether to keep them in their own portfolio, or sell them to the secondary market – in the US it could be Fannie Mae, Ginnie Mae, Freddie Mac or other large investors, in Canada it is mostly other banking institutions. Most mortgage bankers will have a retail and wholesale division. Wholesale mortgage lenders often do not have retail departments and rely on mortgage brokers and correspondent lenders for loan origination. Correspondent mortgage lenders are lenders who act on behalf of a larger lender and are allowed to underwrite the loan and fund it on their own. They usually sell originated mortgages to the wholesale lender shortly after closing the loan.
Once a mortgage lender makes you an offer, remember it isn’t cast in stone, so continue to negotiate. You never know, but on any given day, loan brokers and lenders may offer two different deals to people with the same qualifications. The reason is that they are probably allowed to keep some of the difference as compensation for generating the loan. These situations can occur in both fixed and adjustable-rate loans. In theory, once you sign with a mortgage lender, you’ll be sending that company a check every month for the life of your mortgage. In today’s market, however, mortgages are often sold between companies. There’s a good chance that the company you sign with at your real estate closing will not be the same one you are paying at the end of your loan. When lenders sell mortgages to one another, the terms of the mortgage should stay the same. The only difference you may see is the address where the check is sent.
There are literally thousands of mortgage lenders. Some lenders are very small, such as local banks that focus on lending money for real estate in a small geographic area. There are also larger lenders who provide mortgage loans through an entire province or region and there are lenders who make loans nationwide.