If you’re ready to look for a mortgage loan, you may have questions about which type of lender will best meet your needs.
You can choose from three types of mortgage lenders — retail banks, credit unions, and mortgage banks — as well as mortgage brokers, who compare loan products from a variety of lenders to help you, the client, find the right one. In addition, Maryland residents have access to the state’s Maryland Mortgage Program, which provides loan options that are only available to them.
Before you start narrowing down the candidates, know what you’re looking for and where to find it. Let’s talk about your options.
Retail Banks
What they are: These include national bank branches and local banks. In addition to mortgage lending, they likely offer checking and savings accounts, ATM access and other types of loans. They do their own underwriting (in a nutshell, investigating your finances), which can sometimes mean lower fees and less-stringent credit requirements. If you like to have your accounts all in one place, this can be a good option for you.
Who you’ll work with: You’ll be assigned a loan officer, who will receive a commission or bonus for writing your loan.
Credit Unions
What they are: If you are a member of a credit union’s community, which could be faith-, employment-, interest-, or union-based, you could look to them for a mortgage loan in addition to the other banking services they offer. Because they are not-for-profit and customer-owned, they typically offer more personal service and lower fees, though they may have fewer branches and ATMs. The National Credit Union Administration’s Credit Union Locator is a tool to find credit unions near you.
Who you’ll work with: As with a bank, you’ll be assigned a loan officer, who will receive a commission or bonus for writing your loan.
Mortgage Banks
What they are: There are certain banks that offer only home loans instead of other banking services. Many of these are online only and do not offer a physical bank branch in local communities. Applying for a loan from these providers can be convenient but may offer less guidance and personal attention than other lenders, which may not best meet the needs of less experienced buyers.
Who you’ll work with: A mortgage bank will assign you a loan officer, who will receive a commission or bonus from the lender’s gross fees for writing your loan.
Mortgage Brokers
What they are: Mortgage brokers are essentially personal home loan shoppers. They act as liaisons between home buyers and several mortgage lenders to help people find the lowest rates and the best mortgage terms. They leverage their existing relationships with lenders — something individual home buyers can’t do.
Who you’ll work with: A mortgage broker can be an individual agent or a group of agents who act as independent contractors. In exchange for their services, mortgage brokers typically charge a percentage of the loan principal, which is paid by either the borrower or the lender at closing. The charge can vary greatly.
Maryland Mortgage Program
What it is: An additional consideration for Maryland home buyers is whether your lender offers loan products from the Maryland Mortgage Program (MMP). The State of Maryland provides several loan options which also include downpayment and closing cost assistance, funds for housing improvements or student loan payoffs. You can find the right MMP loan for you with their Get Started page.
Who you’ll work with: If you are interested in using an MMP loan for your purchase, you can only use approved lending institutions. There are over 100 participating, state-approved, banks and mortgage companies throughout Maryland that can work with you to apply for a Maryland Mortgage Program home loan. View lenders in your area using the Find a Lender tool.
