Moises Reyes asked:




Be More Informed By Understanding Your Home Loan Mortgage Lender Options

If you’re looking to purchase a home, then it’s important to understand that the first step in the home buying process is to choose and meet with a lender. Before obtaining a home loan mortgage, it’s in your best interest to understand the different lender options available so that you can make the best decisions possible and ensure that the home buying process is a rewarding experience.

Types of Lenders

There are several different types of financial institutions that offer mortgage loans. These include mortgage banks and credit unions, among others. Federal and state agencies regulate most of these lenders and require them to follow federal and state mortgage law.

• Mortgage Brokers

- A mortgage broker is a middleman, representing a wide variety of lenders ranging from online mortgage companies to traditional national banks. They act as intermediaries who sell home mortgage loans for individuals or businesses. As the mortgage market has become increasingly competitive in our society, the role of mortgage brokers has overtaken traditional banks and lending institutions as the largest sellers of mortgage products. Although brokers will often offer a greater variety of lending options, they may also be less regulated depending on the state.

• Mortgage Banks

- A mortgage bank is a lender that specializes in originating and selling home mortgage loans directly to consumers. The key difference between a mortgage banker and a mortgage broker is that a mortgage banker funds its lending with its own capital, obtaining their funds by selling their loans in the secondary mortgage market. Once they originate a loan, they place it on a warehouse line of credit until they can sell it to an investor such as Fannie Mae or Freddie Mac.

• Banks and Credit Unions

- National banks and credit unions raise money to fund mortgage loans through their customers’ checking and savings accounts and certificates of deposit. They provide loans to individual consumers or businesses with the money they have on deposit. Larger institutions may also sell mortgage-backed securities in the financial market to obtain funding to sell mortgage loans to customers. When banks and credit unions make a mortgage loan, they will either hold it in portfolio or sell it to large secondary mortgage market investors such as Fannie Mae or Freddie Mac.

• Savings and Loan Associations

- A savings and loan association (S&L), or “thrift,” specializes in accepting savings deposits and making loans, particularly mortgage loans, and they are owned by and operated for the benefit of its members. In other words, a savings association member is a stockholder in the company, which is typically incorporated and must adhere to federal or state incorporation requirements.

Carla

Charles Essmeier asked:




The mortgage industry has long been able to adapt to changing market conditions. When interest rates rose to double-digit levels in the late 1970′s, the industry made more adjustable-rate mortgages available. When the savings rate began to drop and Americans had less to put down on homes, the industry made more flexible loan products available that did not require as large a down payment. And now, as immigrants begin to comprise a larger and larger portion of our population, the lending industry is begun to introduce loans that are tailored to an immigrant population that may not have solid credit histories or Social Security numbers.

These loans, known as ITIN loans, are offered to illegal immigrants that do not have a Social Security number. They can qualify for the loans by obtaining an Individual Taxpayer Identification number (ITIN) from the Internal Revenue Service. The IRS issues these numbers to people who are required to pay taxes but are ineligible for a Social Security number. The government uses these numbers for tax purposes only. A few small banks, as well as national banks Citibank and Wells Fargo, have started to issue loans to customers who have an ITIN but not a Social Security number. Most of these loans have been issued in California, but they will probably be available in other places soon.

The process of obtaining an ITIN loan is somewhat more complicated than that of applying for a conventional mortgage. Applicants with an ITIN usually have a credit history that is less well documented. As a result, the usual background work required issuing such a loan is more complicated and more time consuming than for a conventional mortgage. In addition, fees and interest rates will tend to be higher than for other types of loans in order to compensate lenders for the additional trouble and additional risk.

While there is plenty of opposition to lending money to people who are here illegally, few would argue that a neighborhood that consists of homeowners, rather than renters, is a better neighborhood for everyone. Owners are much more likely to take care of their property and show concern for the neighborhood as a whole than are renters. Thus, any lending plan which encourages people to buy, rather than rent, is good for everyone.

Marcia