There are a number of different types of lenders in today's mortgage market. The most common include:

• Banks - The classic lender, a bank uses its own assets to fund a loan.
• Mortgage Banks - A mortgage banking firm uses its own funds or credit line to fund a loan; however, the firm recoups this investment by immediately selling the loan to other investors.
• Mortgage Brokers - A mortgage broker represents another lender or investor. The brokerage does not use its own capital to fund the loan - it acts only as a representative.

There is often little practical difference between these types of lenders. Homebuyers should find the lender offering the package that best suits their specific needs (for example, low rate, no points, large loan, self-employed, poor credit, etc.).