After finding a home, the home loan process begins. Where should a home buyer look for financing?

There are several types of mortgage lenders. These lenders include commercial banks, credit unions, mortgage bankers, and private or hard money investors.

Commercial banks and credit unions gather funds from their customers through checking accounts, savings accounts, and certificates of deposits. These transactions help fund mortgage loans. These institutions then have the option to hold these loans in their portfolios or sell them to secondary market investors.

Mortgage bankers, on the other hand, do sell their loans in the secondary mortgage market. Mortgage bankers have a different approach to the banking business. They focus on the business aspect of mortgage loans and offer very attractive loan programs and interest rates.

Private and hard money investors gear their focus towards specialty loans, foreclosure bailouts, fix and flips. Simple put, these specialty loans or niche loans are designed for borrowers who could not met the criteria for a conventional or FHA loan.

The lending market is very competitive, especially in the sub-prime market. The sub-prime market is a lending market that focuses on borrowers with credit scores between 580 and 680. Here lenders develop loan programs for borrowers who have average-to-below average credit scores. The loan programs and interest rates may not be as good, but these programs do allow first time home buyers the chance to finance homes. These lenders also give hope to borrowers who have made financial mistakes in the past, and enable them to finance homes. The lending market is also very competitive for borrowers who have great credit scores as well. For borrowers who have credit scores from 680 and up, there are a plethora of mortgage lenders and loan programs to choose from. Especially, borrowers who put down large down payments and can cover closing costs. Every home buyer wants the best interest rate possible, so shop around there will always be a lender who can quote a lower interest rate.

Whether the home buyer has been through the home buying process before or is new to the process, choose wisely, and know the market. The more the borrower is aware of the market the better off the borrower will be come closing day.