Direct Lenders - Banks – usually have very strict underwriting guidelines. Usually require well qualified borrowers. Generally have lower closing costs and lower rates. The loan is funded by the bank and may be held there or sold to a servicer.
Brokers - They look for the best terms and rates from a variety of sources. Closing costs a little higher and competitive rates. The loan is funded by the investor/servicer.
Correspondent - The best of both worlds. Correspondent lenders are similar to mortgage bankers in that they make the lending decision and fund the loan with their own money or credit line. You'll be dealing with the banker who is funding your loan, yet that banker is able to shop your mortgage around, which can obtain you a lower interest rate. Generally low closing costs and low rates. The loan is immediately sold off to an investor/servicer.
