There are four main types of mortgage companies where you can apply and receive a mortgage loan, and the one that works best for you will depend on your situation:

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• Banks and Mortgage Bankers - This is a great option if you prefer to have all of your financial accounts in one place; however, it may take longer to close your loan. Additionally, they may not offer government-backed loans (for example, FHA, VA, or USDA home loans).

  • Perhaps the most common of all financial institutions are banks.

  • Banks get their money from investors and its own customers.

  • In addition to offering checking and savings and investment options, banks will often offer different types of mortgage loans for qualified borrowers.

  • For many people, their local bank is the first and possibly only financial institution they will ever do business with.

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• Credit Unions - Credit unions usually offer loans only to their members. They may have lower costs and interest rates, but like banks, they may take longer to close. Like banks, they may not offer government-backed loans.

  • Credit unions are very similar to banks, except that they are owned by their account holders, known as members.

  • These institutions usually require membership and get funds from their members.

  • Similar to their bank counterparts, credit unions offer a range of services to their members such as depository accounts for checking, savings, and retirement.

  • As with banks, credit union members will often utilize their institution as a one-stop shop, obtaining their mortgage loan, as well as all their other banking needs at the same place.

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• Mortgage Lenders - Unlike banks and credit unions, which offer a variety of financial services, mortgage lenders exist for the sole purpose of real estate loans. Unlike banks and credit unions, most mortgage lenders can take care of the entire process “in-house.” This can shorten the time frame involved with obtaining a mortgage.

  • A mortgage lender is a financial institution, similar to a bank, that originates and funds loans in their own name.

  • Unlike banks and credit unions, mortgage lenders exist for the sole purpose of making loans against real estate.

  • Most mortgage lenders do not service, or “keep”, their loans. Instead, lenders sell their loans to banks or servicing companies.

  • These servicers then take on the job of collecting payments on a monthly basis.

  • Mortgage lenders get their money from banks, also known as investors.

  • Unlike banks and credit unions, most lenders do all their own loan processing, underwriting and closing functions “in-house.” They can take care of the entire process with internal staff.

  • In-house operations shorten the time frame involved with obtaining a mortgage loan.

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• Mortgage Brokers - Mortgage brokers do not lend money directly; rather they have access to many different lenders and loan programs. This can give you access to more options. But they do not have as much control over the speed of a loan approval as a bank or mortgage lender.

  • A mortgage broker is essentially a “middleman” between the homeowner and bank.

  • Mortgage brokers do not lend money directly.

  • Brokers have access to many lenders, as well as many different loan programs.

  • In some cases, especially when your credit isn’t perfect, a mortgage broker can shop around to find a home loan that isn’t offered by a bank, credit union, or even a lender.

  • Home buyers with special income types, lower credit, or are looking at a unique property might inquire at a broker first.

  • Or, if your home bank or credit union can’t approve you, your next step is to talk to mortgage companies and brokers.