The Primary Mortgage Market

The Primary Mortgage Market

So you’re beginning the process of purchasing a home. You may know you need a loan to finance the purchase, but not much more than that. If you’re feeling in the dark, we’re here to help break down some of the pieces of the financing puzzle, and give you enough context to get started. 

A mortgage is a type of loan, specifically for real estate. But let’s give you a little bit more context.

A mortgage is a legal agreement between you as the borrower and the Lending Institution.

The real estate – usually, the property itself plus the land it sits on – is used as collateral for the borrowed money. The mortgage is a recorded document that outlines that agreement. Tied to the mortgage is the note that represents the loan amount, and the interest the creditor will take over the life of the loan.

Where a Mortgage Begins…

To understand taking out mortgages for your home purchase, you need to know about Loan Originators. These are institutions that lend money. Loan originators work in two mortgage markets: the primary market and the secondary one. In the primary market, primary lenders work with borrowers who are looking for owner-occupant and/or investment properties. Here are some examples of primary lenders:

  • Mortgage Bankers provide mortgages to borrowers with their own funds or borrowed funds.
  • Mortgage brokers work as liaisons, connecting borrowers with potential lenders.
  • Commercial Banks (like Wells Fargo, Bank of America, etc.) are financial institutions that provide mortgage loans as well as other banking products, such as checking and savings accounts.
  • Credit Unions are financial institutions operated as not-for-profit organizations and can, like for-profit financial institutions, provide mortgage loans to borrowers.
  • Savings and Loans Associations are similar to traditional financial institutions and can accept savings deposits and provide mortgage loans.
The Primary Mortgage Market is where home mortgages begin before they’re sold to investors in the
​​​​​​​Secondary Mortgage Market.

In the secondary mortgage market, institutions buy loans from loan originators. They sometimes also bundle them together as mortgage-backed securities (MBS). This is where Fannie Mae and Freddie Mac come in. 

How do I begin to look for my best mortgage options?

Mortgage options can vary drastically. It depends on variables like product offerings, locality, and your relationship to the specific institution. What will certainly help narrow your best options is ensuring the institution – and especially your particular loan officer/team – are familiar with and are successful working in the local market you’re looking in. In order to set you up for success, the expected timelines and customs specific to a market are critical to understand. A transaction with a great institution can be soured by a not-so-great loan officer, and vice versa.

If you’re looking to purchase in the Bay Area or Los Angeles, our team at Willowmar Real Estate would be happy to discuss and provide a more customized set of recommendations for who to begin conversations with. 


Willowmar Real Estate is a small and vibrant, top-producing real estate team servicing the San Francisco Bay Area & Greater Los Angeles. Our clients live throughout the San Francisco Bay Area, US and abroad, and our services are tailored to meet their needs. We wear the compasses of guides, the souls of counselors, the hats of project managers and the hearts of advocates with you every step of the way. In addition, with our highly recommended list of vendors, whom we view as an extension of our business, we are constantly matchmaking. We’ve got our trusted pocketbook of contractors, designers, attorneys, painters, childcare providers, you name it — and partner agents around the globe as you continue to find your place in the world.

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