Types of lending

Peter Pham of Certainty Home Lending

If you need a loan to buy your property, you will need to familiarize yourself with the different options for lending.

When exploring financing options for a home purchase, it’s important to understand the differences between a direct bank, a mortgage broker, and a mortgage banker.

A direct bank—such as Chase, Wells Fargo, or Bank of America—offers loans directly to consumers using its own suite of loan products. These institutions are often well-known and may provide incentives for existing customers. However, their loan offerings are limited to in-house products, and their underwriting process can sometimes be less flexible or slower compared to other options.

A mortgage broker acts as an intermediary between the borrower and multiple lenders. Rather than offering a single institution’s products, brokers shop around on your behalf to find the most competitive rates and terms available across a range of lenders. This can be especially helpful if you have unique financial circumstances or are seeking specialized loan programs. While brokers offer a wide array of options, they do not control the underwriting process themselves—it is handled by the lender that ultimately funds the loan.

A mortgage banker operates somewhat in between. They fund loans with their own capital and typically process, underwrite, and close loans in-house, which can allow for a more streamlined and responsive experience. Mortgage bankers may offer more variety than direct banks and often close loans faster, though they frequently sell the loan on the secondary market after closing. In some cases, their fees can be slightly higher, but they maintain greater control over the loan process from start to finish.

Each option has its advantages, and the best choice depends on your financial situation, preferences, and timeline.