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Mortgage Lender Options
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Mortgage Lender Options

Harry Jensen, Trusted Mortgage Expert with 45+ Years of Experience
, Trusted Mortgage Expert with 45+ Years of Experience

It is important to realize that you have lender options when shop for a mortgage.  You can use these options to create competition for your mortgage business and make sure you are getting the best loam terms.  There are several types of mortgage lenders including banks, mortgage brokers, mortgage bankers, credit unions and private money lenders.

Use the FREEandCLEAR Lender Directory to search over 3,900 lenders by type.

MORTGAGE LENDER DIRECTORY
MORTGAGE LENDER DIRECTORY
3,900+ LENDERS ● 25 LOAN PROGRAMS ● RATINGS & REVIEWS
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Each type of lender offers borrowers advantages and disadvantages. Some lenders offer more competitive mortgage rates while other lenders offer a wider range of mortgage programs. Some lenders offer more flexible qualification guidelines while different lenders work with credit-challenged borrowers. Because lenders have strengths and weaknesses, we recommend that borrowers contact different types of lenders to understand the mortgage options available to them.

The table below outlines the positive and negatives for different types of mortgage lender. Some lenders such as banks, mortgage bankers and credit unions are direct lenders, which means they lend you money directly for your mortgage, potentially allowing them to offer you a lower interest rate. Other lenders such as mortgage brokers do not fund mortgages directly but instead act as a personal mortgage shopper for borrowers and compare rates and fees from multiple funding lenders to find you the best loan terms, so you benefit from lender competition. Private money lenders charge the highest interest rates and fees and are used by borrowers who have poor credit, who are unable to qualify for a mortgage with other types of lenders or who are seeking specialized loan programs.  Review the table to learn what type of of lender best meets your mortgage needs.

Mortgage Lender Options

Lender Type
Definition
Example
Pros
Cons
Banks
  • Take deposits from customers and loan money to borrowers
  • Banks fund mortgages, which means they actually provide you the money for your mortgage
  • They may keep your mortgage or sell it to a third party in the secondary mortgage market
  • Wells Fargo
  • Bank of America
  • Chase
  • Direct lender
  • May be more difficult to qualify for mortgage
Mortgage Broker
  • Personal Mortgage Shopper
  • Work with multiple lenders to offer borrower the best mortgage product
  • Also referred to as third party originators
  • Do not fund loans but work with a number of funding lenders
  • Typically smaller, local companies
  • Compare mortgage offers from multiple, competing lenders
  • Does not fund loans
  • May not offer better mortgage terms
Mortgage Banker
  • Originates and funds mortgages using a corporate line of credit
  • Does not take deposits from consumers
  • Sells all loans into secondary mortgage market
  • Quicken Loans
  • Direct Lender
  • Alternative to using a bank
  • May have limited resources
  • May not offer better mortgage terms
Credit Union
  • Takes deposits from customers and loans money to borrowers
  • Typically not for profit institutions which may allow them to offer more competitive mortgage rates
  • You must be a member to obtain a mortgage from a credit union
  • Membership eligibility may require employment with a specific organization (active military, etc.)
  • Typically sells loans into secondary mortgage market
  • Navy Federal Credit Union
  • State Employees Credit Union
  • Potentially lower rates and fees because of not for profit status
  • May need to meet eligibility requirement
Private Investors
  • Individual investors who offer mortgages to borrowers
  • Typically require low Loan-to-Value ratios and charge higher interest rates
  • Typically used by individuals with poor credit histories
  • Individual investors
  • Access to mortgage when no other options exist
  • More expensive type of mortgage financing

After you review your lender options, you should treat the mortgage process like you would any other major purchase, such as buying a car -- shop around, compare proposals from multiple lenders and negotiate the best terms for your mortgage.  Gathering and comparing proposals from several lenders -- including different types of lenders -- ensures that you receive the lowest mortgage rate and closing costs.  It takes extra time to compare lender proposals but spending an extra hour or two shopping for your mortgage can save you thousands of dollars.

The table below shows mortgage rates and closing fees for leading lenders. We recommend that you shop multiple lenders to find the best loan terms. Comparing loan proposals enables you to find the lender and mortgage that are right for you.

%
Current Mortgage Rates in San Diego1, California1 as of October 30, 2020
  • Lender
  • APR
  • Loan Type
  • Rate
  • Payment
  • Fees
  • Contact
View All Lenders

%

Data provided by Brown Bag Marketing, Inc. Payments do not include amounts for taxes and insurance premiums. Read through our lender table disclaimer for more on rates and product details.

Review our instructional video to learn more about your mortgage lender options.

FREEandCLEAR Mortgage Instructional Video

Mortgage Lender Options Instructional Video

Sources

"Finding and Working With Your Lender."  My Home by Freddie Mac.  Freddie Mac, 2019.  Web.

About the author
Harry Jensen, Mortgage Expert

Harry is the co-founder of FREEandCLEAR. He is a mortgage expert with over 45 years of industry experience. Over his career, Harry has closed thousands of loans for satisfied borrowers and now offers his advice and insights on FREEandCLEAR.  Harry is a licensed mortgage professional (NMLS #236752). More about Harry

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