One of the least understood aspects of Santa Cruz County home loans is the different types of lenders. Many people assume they have to get a home loan from a traditional savings and loan. Not so. There are many different types of lenders.
Here are the main types of mortgage lenders and how they function:
1. Mortgage Bankers: Mortgage bankers are loan originators that operate with the sole objective to sell the loan they create to another source. Even though they will sell the loan they must have the ability to finance the loan in the first place and hold it until it is sold.
2. Mortgage Brokers: This type of lender does not originate loans for your Santa Cruz County home, they prepare the paperwork to submit to multiple lending institutions and get offers they will present to you to choose from. Their offers may come from any of the other types of mortgage lenders.
3. Banks and Savings & Loans: These are the most common traditional sources of mortgage loans. They use the backing of their depositors to fund mortgages. In turn, they use the money paid by borrowers to repay the depositors’ interest for allowing them to use the money as an investment.
4. Credit Unions: Credit Unions operate in largely the same way a bank or savings and loan does by using money from a pool of depositors to finance investments in the form of mortgages and other types of loans. The difference is that most credit unions are operated out of a collective pool of closely associated people generally through a work place or professional organization.
If you’d like help determining the best type of mortgage lender for your Santa Cruz County home purchase, give me a call today at 831.662.6522 or email me at Lauren@LaurenSpencer.com or visit my website at www.MySantaCruzRealEstate.com.