Investors vs. Lenders

Though these two terms sound quite alike, they are not the same. They are heavily involved in the business industry, and chances of you working with one or the other are highly probable. 

Investors

Investors are people who put money towards a product or entity with the expectation of generating a larger benefit or financial return in the future. Additionally, investing is a long term practice. Those involved tend to take a smaller risk for a larger gain.There are a few different types of investors: passive investors & active investors.

Passive Investing: a safer method of investing. This is more of a buy-and-hold tactic which limits the amount of turnover by following the index. 

Active Investing: riskier method of investing. Involves a constant buying/selling strategy. Investors can either invest under their own personal account (retail investors), or those who invest in a start-up (angel investors), or those who invest in private companies. Individuals can also become investors themselves by building a portfolio and having sufficient funding to have the ability to invest in an individual, or a business entity. 

Lenders

Lenders are people who offer capital/funds to someone or their business with the expectancy of those funds to be paid back. The most common type of lender are mortgage bankers, retail lenders, warehouse lenders, etc.

Mortgage lenders: tend to either be banks or some financial institution/center. They offer money/funding to someone who wants to purchase a home.

Retail lenders: they offer mortgages directly to clients.z

Direct lenders: these lenders create their own loans by either using their own funds or borrowing them from a third party. Once the borrower receives the money, they pay it back in interest rates or fees. You either pay it back in increments, which are monthly mortgage payments, or in a lump sum. In order to be granted a loan,  a borrower must have a good credit score and history. 

A few things that you may need to show to a mortgage lender in order to qualify are:

• documents which show your financial history
• bank/financial statements
• credit score history
• mortgage application

This is a rough draft of some of the documents needed. Typically, it varies from lender to lender.