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Choosing the Right Loan
It used to be that a borrower would save money until they had a 20% down payment to put toward the purchase of property. The local bank would make the loan out of the funds accumulated from deposits, and service the loan in house. Now days they would call this a portfolio loan. A bank holds a portfolio loan as one of their own investments rather than selling it off on the secondary market. The secondary market allows banks and mortgage brokers to resell loans, so instead of making a loan as an investment, they just earn income from performing the transaction.This allows them to make an unlimited amount of loans since they are not limited to the funds held as deposits.
It used to be that a borrower would save money until they had a 20% down payment to put toward the purchase of property. The local bank would make the loan out of the funds accumulated from deposits, and service the loan in house. Now days they would call this a portfolio loan. A bank holds a portfolio loan as one of their own investments rather than selling it off on the secondary market. The secondary market allows banks and mortgage brokers to resell loans, so instead of making a loan as an investment, they just earn income from performing the transaction.This allows them to make an unlimited amount of loans since they are not limited to the funds held as deposits.