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A mortgage originator is the entity that facilitates the origination of a mortgage loan. A mortgage loan is originated when the borrower and the bank sign the loan documents and settlement and when the borrower is issued the check to be paid to the person from whom he is buying the home. A mortgage originator can be a mortgage banker at a bank or can be an independent mortgage company who helps a client finance a home purchase.
There are several major types of mortgage loans: a first mortgage, a second mortgage or home equity loan, a mortgage refinance or a construction loan. A mortgage originator can be involved in helping to facilitate each type of loan. A first mortgage is generally used to buy an existing home, while a second mortgage may be used to provide additional funds to buy the first home or may be used to tap into the equity of a house and get cash out. A refinance is used to pay off an existing mortgage to change the terms of that mortgage. A construction loan is used to finance the building of a new home.
When a person applies for a mortgage, that individual must meet certain criteria. The mortgage originator will help the borrower determine what criteria must be met and will evaluate to ensure the individual completed the requirements. For example, an individual will generally need to provide proof of income in the form of tax returns, as well as information about his credit in the form of his Social Security number that is used to pull his credit score.
The bank or lender will usually evaluate the information to determine whether a person can qualify for a mortgage. The lender may also appraise the home or property to determine if it is sufficiently valuable to act as collateral for the loan that is being granted. The mortgage originator — whether a bank, a third party lender, or a mortgage brokerage house — is usually responsible for completing these steps to ensure the mortgage application should be granted and the mortgage is a wise investment for the bank or lender to make.
There are several types of mortgage originators a person can use to borrow money. Banks originate mortgages and the client works with the banker. Third party or mortgage brokerage firms also originate mortgage loans. A mortgage broker can help a client decide which mortgage origination company is best suited to his needs.
@Terrificli -- An originator who deals with national companies in the secondary market might have some more options when it comes to mortgages.
They might have some products available for people with less than stellar credit, for example. That's not to say the local folks can't be competitive, but there are some advantages in going with originators who deal with national companies. Compare the products offered by originators dealing with both local and national servicers and see which ones have the best products for you.
When deciding on which mortgage originator to use, make sure you know if the financial institution he or she works for services their own loans or sells them in the secondary market. That can make a big difference.
If you go with a local institution that services its own mortgages, then you will deal with that bank whenever you have any issues about your home loan pop up. If you deal with one that sells mortgages into the secondary market, you will probably have to deal with a large, national company that services your loan and that can mean you might not get the personal service you want.
Most people, I suspect, don't care one whit about whether their loans are serviced locally or by a national company. Some people care a great deal about that, however.
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