Mortgage Lender

The mortgage lender is the bank or credit union that most people interact with when applying for a mortgage. The mortgage representative at the local bank will educate the borrower about the various types of mortgages, the interest rates for each product as well as how much to spend for the downpayment.

The borrower will have to submit proof of income such as pay stubs and other financial information when applying for the loan. The lender will also perform a credit check, which is a review of the borrower's credit history, number of accounts open, amount of debt, and payment history. Any negative information on the credit report, such as late payments, will impact the odds of approval and the interest rate charged by the lender. Once approved, the local bank or lender will host the closing, which is when the paperwork is signed, and the mortgage is legally put on the books.

For the life of the mortgage loan, the borrower will owe the lender for the amount borrowed to buy the home, plus interest. Each of the monthly payments will go to paying down the mortgage whereby a portion of each payment will pay the interest owed on the loan. Another portion of the payment will go to paying the principal or original amount borrowed.

However, there are times when the lender hires another company to handle all the payment processing once the loan is booked—these companies are mortgage service companies.