Introduction Shopping for a mortgage can be a confusing undertaking, even for a well-informed consumer. This report provides a brief overview of the mortgage industry, defines terms that consumers come across during the application process, suggests tips for evaluating advertisements for mortgages, and lists important questions that consumers should ask before applying for a mortgage. There are many types of lenders and even more kinds of loans.
Mortgage brokers negotiate and secure mortgage loans from third party lenders for a fee.
Mortgage bankers, depository institutions, and financial service organizations, however, usually provide loans directly to consumers, so they decide whether consumers will be approved for mortgages and they set the terms of the mortgage as well. Mortgage rates and point structures can be hand tailored to meet individual needs. Consumers should consider the length of time they plan to stay in the home, how much they can spend on a down payment, the rate of return the consumer is receiving from other investments in relation to the mortgage's interest rate, and many other factors. An experienced mortgage broker or banker can be instrumental in explaining the choices available and the pros and cons of each type of loan, so that the consumer can make an informed choice. Definitions There are many terms that consumers should familiarize themselves with as they begin the process of obtaining a mortgage.