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The Advantages of Different Types of Mortgage Lenders,
continued..
PORTFOLIO LENDERS
Portfolio
lenders are usually Savings & Loan institutions, and sometimes banks.
They are called "portfolio" lenders because they tend to originate loans
for their own portfolio (usually adjustable rate loans), not for resale
in the secondary market. The distinction gets blurred because most
portfolio lenders also engage in mortgage banking.
They will
often pay more compensation to their loan officers for originating a
portfolio product than for originating a fixed rate loan. You may also
find that they are not as competitive as mortgage bankers and brokers in
the fixed rate loan market, though this is no longer a hard and fast
rule.
It is
often easier to qualify for a portfolio loan, so they are often a lender
of "second resort" for those who cannot qualify for a fixed rate loan.
If a loan officer is steering you towards "sub-prime" loans, it might be
wise to check out a portfolio lender first.
Portfolio
lenders also can serve as "niche" lenders because certain things are
more important to them than meeting the more standardized underwriting
guidelines of a mortgage banker. An example would be a savings & loan
which is more concerned with an individual's savings history than being
able to fully document income.
If you
apply for a loan with a portfolio lender and you are declined, that's
it. You're done. If you still think you should be able to qualify for
a loan, you have to start over somewhere else.
BANKS and SAVINGS &
LOANS
Their
major strength is that you will recognize their name. Banks and Savings
& Loans often operate as portfolio lenders, but as the lending world has
changed, most also operate as mortgage bankers and sometimes brokers.
copyright 2000 by Terry
Light and RealEstate ABC, modified 2002 |
