Without having to adhere to the specific regulations that incumbent banks face, nonbanks and alternative lenders have garnered the attention of underserved individuals looking to buy or refinance their homes by reducing interest rates and minimizing down payments.
What is a nonbank mortgage loan?
Nonbanks are financial institutions that offer typical bank-related lending services, like mortgage lending, while providing users an easier path to obtaining loans.
Many non traditional mortgage lenders offer services ranging from first-time home loans to refinancing options. Even though nonbanks offer loans, they cannot offer deposit services such as a checking or savings accounts. Because of this, nonbanks fund mortgage loans by using credit — they sell the mortgages to investors while maintaining the responsibility of collecting payment from consumers. Continue lendo