Mortgage loans

There are so many aspects to mortgage finance that it is actually impossible to put in into a bracket and say this is it. An equal volume of information is also available on the subject on the many mortgage blog.

Primarily the mortgage finance business has two levels of hierarchy

New mortgage

Mortgage refinancing

Under the new mortgages the fund is lent to be utilized against the mortgage property or asset. Whereas, under mortgage refinancing the funds can be utilized for any other purposes also. The former is cheaper in terms of ARR than the later.

There are also different types of mortgage lenders

Portfolio lenders

Such lenders lend their own money and the loans are booked in their accounts. In other words they are creating their own portfolio of mortgage lending.  Once the loan survives a decent period of around 1 year without any late payments, the loan is considered to be fairly marketable. It is at this point of time that the portfolio lenders will sell off this loan in the secondary market to free up their money. The original lender of your loan has now become your service provider.

Direct Lenders

Lenders who fund their own funds are referred to as the direct lenders. Such lenders have a book size ranging from very big to tiny ones. Banks are one such example that can use funds from the deposits base to lend mortgage based funding. Direct lenders are most of the times viewed as portfolio lenders but might this might not be the case many a times.