What is the difference between a Mortgage Banker, Mortgage Broker and Portfolio Lender?
Portfolio Lender: Generally banks and savings and loans institutions. They take in deposits and use them to make mortgage loans for their portfolio. They will hold the loan until it is paid off. They make their profit from the interest differential between what they charge their borrowers and what they pay their depositors.
Ex: You bank with US Bank. You are looking for homes and one day you go to the bank and see that they offer mortgages. This is a portfolio loan.
Mortgage Broker: A company that will take a loan in, and they will find someone(usually a bank) to buy the loan from them. They act as an intermediary between the customer and the banks.
Mortgage Banker: A company that will take a loan and approve it. This company will actually fund the loan at closing, and then once everything has been closed and finished, the company will sell the loan to the secondary market. The nice thing about a mortgage banker is that you know the money will be there at closing.
Mortgage bankers also have options on who they will sell their loans to. This is really nice because if one buyer has a better rate, they can give their customers that rate.
It is always useful to do your homework on what kind of lender to go through. Don't just settle for the first person who decides to approve you.
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