Bank v. Mortgage Broker


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A mortgage is an essential part of buying a home, and there are various types that you can buy from various parties. This video explains the difference between getting a loan from a bank versus getting one from a mortgage lender, and the differences between conforming and portfolio mortgages.

Conforming mortgages, of which there are three types, have to conform to a set of guidelines. For example, all VA loans are conformed to a certain lending process. This allows them to be sold together in blocks, which is called securitizing.

Banks and credit unions can make all three types of conforming loans and sell the loan if it conforms to the guidelines. This ensures that everything is predictable. If they simply give you the money, it is a portfolio loan. It doesn’t conform, so they cannot sell it.

This allows them to create any guidelines they want. Home equity loans are an example of this. They keep the loans under their own rules and keep it in-house, meaning you’re only paying back the bank.

Mortgage companies, or brokers, almost never keep a loan. They sell 100% of the loans that they make. They’ll give you a conforming loan and then have a seller lined up. So don’t expect the mortgage broker to collect the payments from you.

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