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CHAPTER   1

Where Mortgage LoansReally Come From

The big myth about mortgage money has been around for a long, long time. It’s about where the money comes from. Lenders don’t use money deposited by other customers to make mortgage loans. In fact, it’s most likely that they borrow the money from somewhere else. This is called their credit line, and it is where mortgage bankers get their money.

Other mortgage companies don’t actually make loans at all; instead, they simply arrange the financing. This is called brokering. This is important, because if you don’t understand how the lender makes its money, you won’t understand where the pitfalls are. ...

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