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Shopping For a Real Estate Mortgage

Have you ever wondered who are the real companies which provide the capital to fund your mortgage. Let’s take a moment to learn what different type companies are in the business of real estate mortgages:

Savings Associations are the largest single source of residential real estate lending.

Commercial Banks usually attract demand deposits (checking accounts) and make short term loans primarily to businesses. They are generally not agood source for long term mortgage loans. 

Mutual Savings Banks are probably less known than savings associations and commercial banks. Mutual saving banks number less than 1000 and aregenerally concentrated on the Northeast Coast.  These entities are active investors in FHA and VA loans.

Mortgage Bankers a type of mortgage company, represent funding sources such as life insurance companies and pension investors. Mortgage Bankers locate borrowers who meet the qualifications of the loan investor, close theloans and then service the loans.

Mortgage Brokers, through a mortgage brokerage business, match borrowers with investors/lenders. Pursuant to a mortgage brokerage agreement, the borrower agrees to pay the mortgage brokerage business a fee. The mortgage broker represents the borrower.

Credit Unions & Pension Funds were prevented by Federal Regulations from making mortgage loans until 1978. Since then they have slowly increased their participation in the mortgage market. Pension funds have traditionally invested their money in high grade corporate and government funds and stocks. Inrecent years, they have begun to put more of their funds into real estate loans.

Life Insurance Companies invest the premiums paid by the policy holders. They are in an excellent position to invest money in long term investments such as real estate. Their major interest however, is in commercial financing for projects such as large apartment complexes, shopping centers or office buildings.

Sellers often finance a part or all of the sale of their own property. Seller financing is more common in periods of high interest rates. Regardless of lien position, when the property seller functions as a lender in a real estate transaction the resulting mortgage is called a “Purchase Money Mortgage” or “PMM”.

There we have it. Everything from Savings Associations to Life Insurance Companies to private individuals are in the business of lending money with real estate as collateral.

If you’re shopping for a mortgage, my platform as a broker is to obtain a wholesale rates, keep costs low and undercut retail offerings. Not that difficult, it’s all about service.

• Mortgage Shopping Tips

By Jim Jump To Comments
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4 Responses to "Shopping For a Real Estate Mortgage"

    Thomas C. Hackett says:

    Sir:  I went to my bank, the one I use for checking and savings. I did this for materials I needed for a loan agency I had begun dealing with to mortgage a home out of state. The rep at my banking center told me I could be “preapproved with them”. The rate was good and I could shop for a home knowing financing was taken care of.
    When I found a home and asked for the paper work to be done it was turned over to a loan center in Tampa, Florida. Then I was informed that my income to debt payments were to high,
    I co-signed for my son’s auto in 2004 and my vehicle monthly amount was too much, my vehicle pay off is 12/2006, 3 more payments and it’s mine clear. I was instructed to get a copy of my son’s checking account to show he has made all current payments, did same, and I was asked if my pension was going to be good for ten more years? Yes,
    I hope for 50 more years, Police and firemans pension for 25 years of service with the New Jersey Department of Corrections, did that through Trenton, NJ. all explained. Then they wanted to know where my $5000.00 downpayment was from, I said another account in New Jersey. Show a letter of how and if it were a gift, from who.
    I explained that the money was in my savings account with their bank.
    I was then informed that because of my debt to income, that I would need at least 20% down, $14000.00 on a $68500.00 home that would be reduced to less that $55000.00 dollars.
    Funny part is when I asked if I should consult a lawyer about this bait and switch deal the branch that made the original preapproval got very polite and extremely helpful.
    Could I have caught them in a scam? It’s been 4 days now and they haven’t said yes or no. If you could reply to this, I would really be grateful.
    ps: The Bank of America to answer your question.        Thom Hackett


    Posted on 09/04 at 11:03 AM
    JAMES MOORE says:

    This is exactly the “corporate runaround” which I speak of in some previous articles.
    Too many large corporations have dropped out the “individual client” and see themselves as behemoths which have their own set rules without face to face service.
    Here’s the motto for success:  DELIVER BETTER THAN PROMISED
    My personal feeling is that it’s difficult for clients who’ve worked for corporations or government to break free from the idea that “big business will take care of me”.
    It’s a leap of faith; but give me “mom and pop” everytime.  Small business has lower overhead and big business charges retail.
    It’s sort of like buying produce from the roadside stand, if the quality is there and the price is right who needs to fund employee vacations, 401K’s and stock options.


    Posted on 09/04 at 12:52 PM
rodolfo chavarriaga says:

need a comercial loan with a1a credit rating over 740 we are buying and office


Posted on 02/06 at 6:02 AM
Toronto says:

When it comes to researching mortgage options, the Internet offers 24-hour convenience. While most customers still prefer to complete their loan transaction with a “live” mortgage broker or lender, there’s a lot of valuable information online.Here, we explore the benefits and alert you to the potential pitfalls of shopping for your mortgage online. Mortgage websites come in two basic flavors: those sites that don’t offer loans (called “no-loan” sites) and those that do.

Mortgage Information (“No-Loan”) Sites..No-loan sites don’t broker or lend mortgage money, but typically provide mortgage content, information, and news, as well as mortgage rates—just what most mortgage shoppers want and need.Sites like HSH Homeplans and Bank Rate Monitor keep daily tabs on mortgage rates, indexes, and market events that push costs up or down. Visit sites like these to obtain the latest regional average rates on purchase, refinance, equity, and other mortgages.


Posted on 01/17 at 5:05 AM

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