A mortgage lender is a bank or financial company that lends money to borrowers to purchase a home. A mortgage servicer handles the payment processing and is the company that sends the monthly statements to the borrower. A mortgage lender or bank can be both the loan provider and the servicer of the mortgage. Both a lender and loan servicer have specific policies and procedures that they’re required to follow, and both are regulated by the federal government.

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.