Mortgage Lenders & Brokers

May 7th 2016

Overview

There are different types of mortgage lenders. A mortgage lender can be found at a bank, credit union or any other lending institution. There are also mortgage brokers who act as intermediates between you and the lending institution. You might be expected to pay the mortgage broker a service fee for his/her services.

How It Works

If you are planning to apply for a mortgage loan at a bank, credit union or other lending institution, you will have to meet the loan officer. They are people who work to sell and process mortgages and other loans initiated by their employer. The loan officer will scrutinize your application and then try to find a loan that best suits your needs. If your personal credit is approved, the officer processes your loan application.

On the other hand, mortgage brokers are professionals who are paid a fee to connect lenders with borrowers. They work with dozens, or even hundreds, of lenders. They are freelancers and are not obliged to use any particular lender. Mortgage brokers are sort of like scouts, who find and evaluate the credit situation of mortgage seekers to figure out which lender would fit them the best. The broker then works with the lender to complete the loan transaction. A good broker can find a lender for both good and bad credit.

Benefits

Both local lenders and mortgage brokers have their own advantages and disadvantages. A local or an online broker could find you a lender in another part of the country. On the other hand, an online bank may not even have a local office where there is someone to help you in person.

Local lenders can understand aspects like the types of heating system, septic system, or other locally used terms, which may not be understood by the out-of-town lenders. An added advantage is that, by searching far and wide, a broker can find you the best possible terms for a mortgage, which will ultimately save you money.

Cost/Pricing

If you go to a lender directly, you will not be charged any additional fee for the services. However, the fee you would pay a mortgage broker is relatively less when compared to the difference in terms you would get between a favorable and an unfavorable mortgage loan. If you are going to use a broker, shop around and make sure the terms are reasonable.

Timing

You should start looking for a mortgage lenders as soon as you decide to go for a mortgage loan. Research well so you can get the best terms.

Companies/Industries

There are a vast number of companies offering mortgage loans, ranging from your local banks and national banks to institutions specializing in local lending. You should get a variety of quotes from different lenders and base your selection primarily on who can offer you the best terms for your mortgage. Some companies that offer morgage loands include Lending Tree, Wells Fargo, and Ditech.

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