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Types of Mortgage Lenders

When it comes to choosing the right mortgage lender, you need to think about more than just interest rates—you need to be confident and comfortable with the company that is giving you the loan. The process of lending mortgages is similar across the board, but there are some subtle differences that could save you money or frustration later. Below are the different types of mortgage lenders and how they differ from each other.

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Conventional Banks 

One of the most common mortgage lenders is the bank that you already use. An upside to working with a conventional bank is that you are already acquainted and comfortable with the company and the people who work there. You are likely to enjoy the personal service of your mortgage loan that is offered at your local bank.

Credit Unions

Credit Unions are much like conventional banks in that they offer much of the same services such as loans, savings accounts, and checking accounts. The main difference is that at a credit union, you need to be ‘connected’ somehow. For example, if you have a family member who is a member of the credit union, you would be able to get a mortgage there. Benefits to obtaining a mortgage at a credit union are the personal service and the possibility of members-only deals.

Non-Bank Mortgage Lenders 

Non-Bank Mortgage lenders are a viable option for those who wouldn’t qualify for a loan at more traditional lenders like a bank or a credit union. Mortgage lenders are more flexible than banks when it comes to imperfect credit and low to moderate incomes. For example, if you qualify for non-conventional loans like an FHA loan, or a federal housing administration loan, non-bank mortgage lenders will be more likely to work with you than conventional banks.

Mortgage Brokers

A mortgage broker is another way you could obtain a mortgage. A mortgage broker will essentially do the mortgage research for you and advise you on what they deem to be the best offer. However, be sure to evaluate the rates and fees that come with your mortgage broker.

How to Prepare 

Before you apply to get approved for a mortgage, make sure you are in a good financial situation to get the best possible rate. Experts recommend that you put between 20-30% down on your mortgage, however, you may be able to put as little as 3% down. You should also check your credit score and try to improve it as much as possible before applying for the loan.

Know What Questions to Ask

Woman talking to young couple across a table with computerTake a moment to think about your specific situation and prepare some questions to ask that would provide you with the best information.

How Long?

When shopping around for a mortgage lender, there are certain things you should consider and ask in order to find the right fit. You definitely should ask how long they expect the process to take from beginning to end. This is to make sure the timeline that you need matches up with the timeline that they can offer you. 


You also should ask the person you are working with whether or not they will be your main contact throughout the process. Sometimes, when your loan is put into underwriting, a different person will finish the process with you. Underwriting is the evaluation of your finances. These steps include verifying your employment, reviewing your tax documents, and checking the stability of your income. The purpose of underwriting is to ensure that you can afford the home you are buying. 


You also might ask what steps can be done online and which steps must be done in person. 

Completing steps online might save you a lot of time and trouble and is worth asking about. 

Interest Rates & Fees

Lastly, you will want to compare interest rates and fees associated with your loan. While these aren’t the only reasons to choose a mortgage lender, they are important and could save you money. Experts recommend that you compare at least three different mortgage lenders’ offers before settling on one. 

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