Welcome to www.lowcostmortgagelenders.com, a place where you can find information on mortgages / loans and the lenders.

Our goal is to provide information and tools so that you can find a mortgage / loan that is suited to your needs

What is a mortgage?
Types and features of mortgages
Types of mortgage lenders
How do mortgage lenders make money for themselves?
How to pick a mortgage that is appropriate for you?

A mortgage (or mortgage loan) is a loan secured by real property through the use of a mortgage note.

Anyone can obtain a loan either to purchase or secure against the property from a financial institution, such as a bank, either directly or indirectly through lenders/brokers/agents.

Types of mortgages

Primarily there are two basic types of mortgages.
1. Fixed rate mortgage
2. Adjustable rate mortgage (ARM) or Floating rate mortgage or Variable rate mortgage
3. Combination of Fixed rate and Adjustable rate mortgages

Features of mortgages

1. Term of mortgage. Time period over which you can pay off your loan.
2. Type of mortgage/Interest. Fixed or Adjustable rate mortgages
3. Payment frequency. Weekly, Bi-weekly, or monthly etc.
4. Prepayment. Any penalties for prepaying the loan ahead of schedule.
5. Points. Money you can pay upfront at the origination of loan to reduce interest rate.

Types of mortgage lenders

1. Mortgage Bankers: Mortgage bankers lend money as "mortgage" and sell their loans in pools on the secondary market to investors such as Freddie Mac and Fannie Mae, and other private investors/parties.
2. Portfolio Mortgage Lenders. These lenders originate and fund their own loans, and may service them for the entire life of the loan. Typically they are neighborhood banks.
3. Direct Mortgage Lenders. Typically a bank or lender that directly works with the borrower. Examples: Bank of America, Chase, Citi, etc.
4. Alt-A Mortgage Lenders. They provide mortgages to borrowers with limited documentation (limited doc). Relatively lower down payments.
5. Subprime Mortgage Lenders. They provide mortgages to people with not so great credit history. The borrowers would have limited or no down payment and would not be able to provide income documentation. Interest rates charged are typically higher than other types of mortgages.
6. Mortgage Brokers. They are licensed and work with banks/lenders of capitals. They broker the transaction between the buyer and provider of capital. In return they earn a fixed commission / rebate or variable spread between what was lent and what was borrowed.
7. Loan Officers. They are supposed to work under the supervision of Mortgage brokers. They are not required to be licensed by anyone. They split the commissions, generated on the loans originated, with the mortgage broker.