Major categories of mortgage lenders include:

• Savings & Loans
  Also called thrift institutions, savings and loan associations (S&Ls) are the largest traditional lenders of residential home mortgages.
  
  A government cleanup of bad loans at S&Ls that ended in the 1990s left behind the stronger S&Ls. These institutions remain a major source of funding for home mortgage loans. S&Ls are often called savings banks in the eastern U.S.
  
  
• Commercial Banks
  Commercial banks offer attractive loan terms, particularly if they evaluate their entire banking relationship with you. Some commercial banks have their own real estate departments and will service your mortgage loan.
  
  Other commercial banks sell their mortgages to Fannie Mae and Freddie Mac, two major government-sponsored enterprises that specialize in buying residential mortgages from lenders.
  
  
• Mortgage Bankers
  Mortgage bankers borrow money from banks or pools of investors, underwrite the loans, and sell them to investors for a profit. They often receive a fee from these investors for servicing your mortgage. Mortgage servicing includes collecting monthly payments, sending out loan statements, and collecting on late payments. For more information, see the Web site of the Mortgage Bankers Association of America (MBAA).
  
  
• Mortgage Brokers
  Mortgage brokers circulate, or "shop," a loan application among lenders to find the most attractive terms for the borrower. In exchange, a lender pays the broker a fee.
  
  
• Homeowners
  You may find that the current homeowner is willing to offer financing in exchange for selling the home sooner. This means that the seller becomes your lender. A common means of financing is for the seller to accept a mortgage note. A mortgage note requires you to make monthly payments to the seller instead of a bank or other lender.
  
  
• Credit Unions
  Since credit unions are owned by their members, they are called cooperative financial institutions. Since they are nonprofit institutions, credit unions may offer attractive mortgage loan rates to their members. Like commercial mortgage lenders, credit unions sell their loans to Fannie Mae and Freddie Mac to maintain access to new sources of funds. The National Credit Union Administration (NCUA) regulates the credit union industry.

When selecting a lender or broker to finance your new home, be sure to do your homework on the company. As interest rates have continued to decline, more and more lenders have appeared in the industry. As rates begin to increase over time, more and more of these new lenders may go out of business. Always check to make sure your lender is qualified and has the resources to service your note for the life of the loan. GET PREQUALIFIED NOW