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The
Advantages of Different Types of Mortgage Lenders
Portfolio
Lenders
Portfolio lenders are usually Savings & Loan institutions, and
sometimes banks. They are called "portfolio" lenders because
they tend to originate loans for their own portfolio (usually
adjustable rate loans), not for resale in the secondary market.
The distinction gets blurred because most portfolio lenders also
engage in mortgage banking.
They will often pay more compensation to their loan
officers for originating a portfolio product than for
originating a fixed rate loan. You may also find
that they are not as competitive as mortgage bankers and brokers
in the fixed rate loan market, though this is no longer a hard
and fast rule.
It is often easier to qualify for a portfolio loan, so they are
often a lender of "second resort" for those who cannot qualify
for a fixed rate loan. If a loan officer is steering you
towards "sub-prime" loans, it might be wise to check out a
portfolio lender first.
Portfolio lenders also can serve as "niche" lenders because
certain things are more important to them than meeting the more
standardized underwriting guidelines of a mortgage banker.
An example would be a savings & loan which is more concerned
with an individual's savings history than being able to fully
document income.
If you apply for a loan with a portfolio
lender and you are declined, that's it. You're done. If you
still think you should be able to qualify for a loan, you have
to start over somewhere else.
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