Mortgage banks have their own set of terms that relate specifically to their industry. The following glossary will help you better understand and communicate with your mortgage banker. As with any industry, it is important that you understand the terminology used. If at any time during your transaction or communication with your mortgage bank or loan officer, it is vital that you ask for clarification until you do understand the terms and the items to which you’re agreeing.
Correspondent mortgage lenders are a type of mortgage bank that originate and fund loans, but then sell those loans to mortgage lenders. The mortgage lenders who purchase the correspondent mortgages then sell those loans or service them for the life of the loan. Most correspondent mortgage lenders offer a large variety of loans and products from a variety of lenders and sponsors, on whose behalf they act.
Also known as: correspondent mortgage lenders, correspondent mortgages, correspondent mortgage bankers, correspondent mortgage banks
A direct lender is a bank or mortgage lender that works directly with homeowners and funds mortgages with their own finances. They do not use middlemen or brokers to deal with clients; instead, they perform all aspects of the mortgage lending process. Mortgage bankers, portfolio lenders, and other entities are considered direct lenders.
Also known as: direct mortgage lender, mortgage banker, direct mortgage banks
government-backed mortgage loans
Government-backed loans, such as FHA loans, Veterans Affairs loans (VA loans), HUD loans, USDA rural home loans, and more, are those that are subsidized by the US government. These loans protect lenders against payment defaults, which can help borrowers get lower interest rates. Most government-backed loans are intended to help lower-income families afford homes and enable first-time homebuyers to get into homes. Many local mortgage banks can offer government-backed mortgages and government loans to qualified clients.
Also known as: government loans, government-backed mortgages, VA loans, HUD loans, USDA loans, FHA loans, subsidized mortgages
Jumbo mortgages, also called jumbo loans, are large mortgages with amounts higher than conforming loan limits. Conforming loan limits are the limit at which government programs Fannie Mae and Freddie Mac will purchase mortgage loans. This means that jumbo loans are a greater risk for lenders because of a higher probability of default and a lower probability of being able to sell the defaulted property for the full price. Jumbo loan amounts vary by location, but most are more than $417,000 for typical homes or $729,750 or 125% of the median home price for homes in more expensive areas. Not all mortgage banks offer jumbo mortgages because of the amount of capital needed and amount of risk incurred.
Also known as: jumbo mortgages, nonconforming loans, jumbo mortgage loans
Mortgage banks provide loan evaluation services, including verifying applicants’ suitability, loan history, employment status, salary, credit history, and past and current financial information. This information is traditionally required to fill out loan documents, and loan officers may help clients access the information and fill out necessary forms.
Also known as: loan evaluation services, loan evaluations, loan application qualifications
A mortgage is a financial loan that enables an individual, business, corporation, or other group to purchase property or real estate. The loan often uses the property or real estate purchased as collateral to back up the loan. The purchaser agrees to specific terms to pay the lender over a set time frame until the mortgage loan is paid back in full, at which time the property then fully belongs to the borrower.
Also known as: home loan, real estate loan
Mortgage bankers are mortgage lenders that originate, or fund, their own loans. Mortgage bankers may service the loans they originate, or they may sell the rights to other companies to service the loans. Some mortgage bankers also sell loans on the market to other investors.
Also known as: mortgage banking institution, mortgage banking service
Mortgage bankers are loan officers or loan agents who work at a mortgage bank. These individuals work primarily with home mortgages (although some may work with commercial mortgage funding) that are funded directly through the mortgage bank at which they work. Because mortgage banks are services that are responsible for originating and funding the loans and working with clients, they are responsible for every step of the mortgage process. Mortgage bankers and company representatives are in control of the entire application and lending process.
Also known as: mortgage bankers, loan officers, loan consultants, loan agents, finance officers
portfolio mortgage lenders
Portfolio mortgage lenders originate and fund loans. They may also maintain the rights to service the loan. These mortgage lenders are considered mortgage bankers and often are more flexible than mortgage brokers, since they own and set the terms for their loans.
Also known as: mortgage bankers, portfolio mortgage bankers, portfolio mortgage banks
real estate loans
Real estate properties, including residential real estate, commercial real estate, and real estate land for development and other uses, may qualify for mortgages through mortgage banking institutions. These are borrowed funds and loans based on collateral (usually the property being purchased) that allow buyers to purchase homes, land, and other real estate, and then pay back the loan over time at prearranged terms.
Also known as: real estate mortgages, mortgage loans
residential home loans
Home loans for residential properties and buildings are a common type of loan for mortgage bankers and mortgage banking services. These loans are generally straightforward with a standard set of requirements, fees, and documentation needed. Most good mortgage banks are able to help clients find fair loan rates to enable them to purchase a new home or secondary home.
Also known as: home loans, residential home mortgages
wholesale mortgage banks
Wholesale mortgage lenders originate and fund loans. They may also service those loans or sell them to other companies who will then service them. These lenders work with independent mortgage brokers who deal with clients on their behalf. The wholesale mortgage lenders don’t interface with clients, instead, they rely on their brokers to handle correspondence with borrowers.
Also known as: wholesale mortgages, wholesale mortgage lenders, wholesale mortgage bankers
Read moreRead less