Understanding Wholesale Mortgage Loans
Purchasing a home is a significant financial endeavor. Since most consumers don't have the cash reserves needed to pay for the purchase of a home in full, mortgage loans are an important financial product within today's market.
Mortgages can be issued through two different channels — retail and wholesale. A wholesale mortgage loan can offer consumers a number of benefits, but you must understand how wholesale mortgages work in order to take advantage of these benefits for yourself.
Funding
The funding for wholesale mortgages is provided by large lending institutions. These institutions have a pool of money that they want to utilize for mortgage loans. Rather than working directly with consumers to determine eligibility, large lending institutions establish minimum standards that consumers must meet in order to qualify for a wholesale loan.
Mortgage brokers then work directly with consumers to file the necessary paperwork required to access a wholesale loan. Once the initial pool of money has been lent out to homeowners, the large lending institution will bundle these mortgages and sell them to investors on the secondary market.
Brokers
Mortgage brokers play a key role in the wholesale lending process. A mortgage broker can partner with many different wholesale lenders to provide his or her customers with access to a wide range of mortgage products.
Since each wholesale lender has a different set of criteria governing the disbursement of mortgage loans, brokers are able to find the loan product that best meets a buyer's needs. Working with a mortgage broker typically allows you to find a loan with the most competitive interest rate.
Obtaining a wholesale loan through a broker can also be a great way to qualify for a loan if you have unique financial circumstances, like a lower credit score or self-employment.
Application Process
Applying for a mortgage loan can be stressful. There is a significant amount of paperwork involved in the application process, and all forms must be filled out correctly to ensure your application is processed successfully.
When you opt to work with a mortgage broker to obtain a wholesale mortgage loan, you get the added benefit of having someone to help you through the application process.
Mortgage brokers submit loan applications directly to large lending institutions on your behalf. This ensures that you will have the knowledge and experience of a seasoned professional in your corner as you attempt to secure a loan to complete the purchase of your next home.
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