When you’re considering buying a home with the help of Denver mortgage lenders, you’ll have to deal with paying a mortgage. Finding the right Denver mortgage lender could be the difference between a smooth and quick home buying process or a drawn-out and expensive one. Before deciding from the countless Denver mortgage lenders out there, check out this quick guide to the various types of lenders.
What is a Denver Mortgage Lender?
What is a mortgage lender in the first place? Essentially, a mortgage lender is a company that lends you money to purchase your home. Credit unions, mortgage bankers, and mortgage brokers all fall into this category. Different lenders will often have different requirements to qualify, and some may accept loan types that others won’t.
Direct Denver Mortgage Lenders
Portfolio lenders and mortgage banks fall under the category of “direct lenders.” These lenders originate their own loans, meaning you’ll work directly with them for your application process and for your payments. Direct lenders in Denver take care of underwriting, processing, and closing loans all by themselves, without the need for intermediaries like mortgage brokers. Direct lenders tend to work quickly, which is great if you need to move fast.
When you work with a wholesale Denver mortgage lender, there’s an extra step involved. Wholesale lenders fund mortgages and offer them to banks or credit unions, then the bank or credit union serves as your point of contact. In these situations, the borrower and the wholesale lender never communicate directly. The wholesale lender essentially offers a mortgage to an institution, which then helps the buyer.
Retail lenders, on the other hand, offer mortgages directly to the consumer. Credit unions and banks would fall into this category. Retail lenders have their own unique qualifications and requirements, and they often sell multiple products and services with everything handled in-house. If you want lots of mortgage options to choose from, working with a retail lender could be your best bet.
Portfolio lenders are often appealing to those who don’t meet the guidelines of other lenders. These lenders use their own money to originate mortgages. For instance, a community bank could serve as a portfolio lender, offering you a loan and then keeping that loan in its portfolio (as opposed to selling the loan on the secondary market to companies like Freddie Mac or Fannie Mae). If you need a particularly large loan or if you have a less-than-stellar credit score, you may benefit from working with a portfolio lender. Keep in mind, though, that you’ll likely encounter high interest rates.
Hard Money Lenders
Hard money lenders are usually preferred by borrowers who purchase and “flip” homes or those who can’t qualify with other lenders. These loans involve using the home as collateral during financing. Hard money loans have to be paid back in just a few years, and if you fail to do so, the lender can take over the property. While these loans can be helpful for short-term purchases, they often come with large down payment requirements and high interest rates.
Work with the Best Denver Mortgage Lenders at 5280Lend
Whether you’re a first time homebuyer in Denver or it’s your next round, knowing a bit about the various Denver mortgage lenders can help you make a well-informed decision before purchasing a home. If you’re still stuck, consider working with 5280Lend. We can help you understand how much you qualify for, what to expect throughout the home buying process, what your potential down payments or closing costs may be, and more.
5280Lend is your ultimate resource for getting a loan and purchasing a home in Denver. Contact our team today to learn more about how we can help!