Mortgage loan originators are individuals or institutions who work with borrowers to complete home loan transactions. They are original mortgage lenders that can be mortgage brokers or mortgage bankers. From the beginning of a loan application to the closing, they work with underwriters and processors in the primary lending market. Their work involves gathering the necessary documents and guiding the application through approval. Many loan companies consider loan origination outsourcing to streamline and accelerate the steps involved. Doing that keeps their teams free to focus on other productive areas of loan origination.
Below, we will look at the three distinct types of mortgage loan originators and understand their significance.
- Mortgage Bankers
Mortgage bankers are people or entities that support borrowers in getting mortgage loans. Most mortgage lenders are mortgage bankers, which include online mortgage providers, credit unions, and large banks.
Although mortgage bankers include different types of mortgage-providing entities, it’s important to distinguish between them. The most crucial difference between banks and credit unions is that credit unions are non-profit organizations while banks are. Furthermore, any individual or company can take a mortgage from a bank, but one needs to be a credit union member to get a mortgage from it.
Banks offer mortgage products to aspiring borrowers, including short or long-term fixed-rate loans, government-backed loans, jumbo loans, ARMs, interest-only loans, etc. They may either keep the loan in their portfolio to service it or sell it on secondary markets to other parties. Mortgage bankers can also help borrowers refinance their current mortgage. They determine a borrower’s credibility based on their proof of income, assets, information, and credit documentation.
- Mortgage Brokers
Mortgage brokers are regulated and licensed financial professionals who work with borrowers and lenders. While mortgage bankers work directly with borrowers, mortgage brokers act as intermediaries between them.
Loan origination outsourcing helps mortgage brokers save money and time. Unlike bankers, brokers do not provide loans themselves. They collect documents from the borrowers, such as their information about their income and liabilities, to assemble all details about available loans. They are experts at negotiating better terms for both parties and help in closing a deal.
- Portfolio Lenders
Portfolio lenders use their own money to lend mortgages. These include community banks that are non-conforming and do not sell on the secondary market. That means portfolio lenders hold loans in their portfolio rather than selling them to other parties. They have more flexible loan standards compared to conventional mortgage bankers. Borrowers who need to meet federal requirements and regulations often work with portfolio lenders to get the required financing. But the interest rates and other charges are higher due to the greater risk in these mortgage loans.Aspiring borrowers can choose from different types of mortgage loan originators, including mortgage bankers, brokers, or portfolio lenders. Although they have different choices, choosing the right originator offers the best mortgage service depending on the borrower’s unique needs. Consider loan origination outsourcing to handle the mortgage lending tasks on the best loan scheme.
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