The Bank vs Mortgage Lender Difference
Homeowners seeking financing often ask what the difference between a bank and a mortgage lender is when it comes to doing a home loan. Whether it is a refinance home loan or a purchase home loan, there are distinct differences. A bank, as most people are very familiar with, primarily service checking accounts, savings accounts, CD’s, car loans, and sometimes “Home Equity Line of Credit” second mortgage loans. Some may even do first mortgage position loans, though not all. A Home Equity Line of Credit, also known as a HELOC is a secured home loan that is in second lien position to the primary first mortgage loan. This is referred to as a 2nd mortgage. A HELOC is usually a variable rate loan based on “Prime Rate”, which is an index based loan.
In a precarious economy and housing market, many consumers prefer to choose a “Fixed Rate” loan that is available through mortgage lenders. Residential mortgage lenders specialize in secured mortgage loans. For example, Homestead Financial Mortgage specializes in secured residential home loans. Also, mortgage lenders have a wider array of loan programs that are available to a consumers individual housing situation, that many times a bank doesn’t offer. Having expansive home loan programs helps accommodate different homeowner scenarios, and provides the opportunity to get more home loans approved . Often times, mortgage lenders can also get a more favorable home loan interest rate for a consumer based on having more home loan program options available.
These are the primary differences between a bank and a mortgage lender when it comes to home loans. If a bank has turned you down for home loan financing, a recommendation would be to call a mortgage lender specialist. As a mortgage lender, the loan officer will have access to many more home loan programs than a bank, including the national based home loan programs available to help homeowners. With this access, many consumers will be approved for financing by a mortgage lender, while they were denied at a bank.