Warehouse Lending

Warehouse Lending

 

What is Warehouse Lending?

A warehouse lender will provide financing for other lenders to create home loans. Warehouse lending is essentially a line of credit extended by a bank to a lender to fund a mortgage that a potential home buyer initially used to purchase a home. Typically, this type of loan is a short-term funding program that will provide enough fluidity to create new loans and then sell existing loans on the secondary market.

Many small lenders (lenders who only lend a small amount of money) and bankers use a warehouse loan as a line of credit to fund their smaller operations. The warehouse loans are typically paid back once the loans are sold. The lender of the warehouse loan will get a percentage of each mortgage loan sold.

Warehouse Lending

A Mortgage Warehouse line of credit may be anywhere from $5 million to $30 million. Warehouse loans will be underwritten and approved by the final investor.

A Warehouse Lender will be given as much flexibility as possible, but still will allow a wide range of loans to their customers such as:

What is Warehouse Lending
 
 
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