Mortgage lenders come in a variety of forms: a bank, credit union, brokerage, or independent lender. A mortgage banker works at a single institution of credit — like a bank, credit union, or mortgage company — servicing, selling, or originating the residential mortgage loans offered by that lender. A loan officer works for the financial institution making the loans directly to you, which can make it easier to close on your home faster.
A loan officer works for a bank or a similar institution of credit, who gives you money to take out the loan. A finance banker is a staff member that works and offers loan products for a single lender. The primary difference is that bank mortgage officers represent only the products offered by their institutions, whereas mortgage brokers are middlemen who work with several lenders and are paid referral fees by their lenders. A mortgage broker acts as a middleman, helping consumers find the best lender for their situation, whereas the direct lender is a bank or other financial institution that determines whether or not you are eligible for the loan, and, if so, hands you a check.
In most cases, a broker is paid a fee by the bank to originate the loan. Brokers charge fees that the borrower might have to pay, rather than the lender. In some situations, you might have to pay a broker’s fee on top of your lender’s fees.
You can avoid paying the broker’s fee when applying, and some financial institutions provide benefits such as discounts or reduced fees to existing customers applying for a mortgage. If you are already doing business with a bank or credit union, applying for mortgages directly from that institution rather than working with a broker might be worth considering. These days, there is even an option to go through a non-bank lender, one that does not have brick-and-mortar branches or offers to check accounts, that can offer lower rates and fees on a mortgage than banks and brokers. If you know what you are doing, and you have obtained home mortgages in the past, and have had a fairly straightforward loan, an online, direct-to-consumer mortgage lender might be a better path, at least from a price standpoint.
The types of mortgages that you can obtain through banks or direct lenders may differ. To get the best of both worlds, obtain credit quotes from at least one broker and one bank while shopping around for mortgages, to see which one may be able to get you a better deal. Whichever option you end up going with, looking at quotes from several lenders and a few brokers could help you get the best deal for your situation. Researching your options could pay off with savings up front, on monthly payments, and/or over the long haul if it helps you find a broker or a straight-up mortgage lender that can help you get a competitive home loan rate.
Whether you decide to go through a mortgage broker or a bank to secure your home loan, you should be able to negotiate favourable rates and closing costs. When working with a bank to obtain your mortgage, you can receive discounts on interest rates or closing costs depending on your relationship with the bank. For instance, you might get discounts or bonuses when you open a HELOC, credit card, or checking account along with the mortgage.
You typically make payments directly to the lender once the loan closes. The financial institution will take payments and provide customer service after the closing; however, you may also want to contact your mortgage broker for assistance during your mortgage’s lifetime.
Wholesale lenders typically partner with mortgage brokers and other third parties to offer their loan products at reduced rates, and they rely on brokers to help borrowers apply for mortgages and navigate the approval process. A mortgage broker collects the crucial information and documentation lenders need from the borrower, including income, paychecks, tax returns, details about assets and investments, as well as credit reports. Because mortgage brokers work with a variety of lenders, including large banks, smaller lenders, insurance companies, trusts, and private funds, they usually have access to better rates.
Because they are not tied to one specific bank, brokers will be able to compare each lender’s products and policies to help you find a lending solution that best fits your individual needs and goals. A broker, on the other hand, has a panel of lenders and a variety of products to choose from, so they will apply with only one lender who is likely to approve your loan. A broker may be able to help you figure out what kind of loan you are eligible for, but they are not in a position to make decisions about what amount of money you should borrow, or what interest rates and terms are appropriate. See how the loans offered by the broker compare with the ones you found yourself.
To summarize, mortgage brokers may be a good option if you are shopping around for a home loan, but you should always compare their rates and services with those from your local banks and credit unions, just to make sure. Direct lenders include large banks (like Wells Fargo), credit unions, and mortgage companies specializing in home loans (like Quicken). Mortgage broker Bendigo: A broker is a middleman who helps connect you with the best lender for your needs. While the employees at banks are working mainly for the benefit of their company and products, brokers are acting as agents for customers, evaluating both positive and negative aspects of the loan before they recommend any given decision. If you work with a broker, you may end up having a more individualized lending experience, in which they can craft solutions for your problems, be they low down payments, a limited credit history, or the desire to limit closing costs and/or avoid mortgage insurance.
A good mortgage broker should be able to bring valuable insight to the table, like what lenders are lending in specific areas, what lenders are offering a particular mortgage type, and what lenders are welcoming or avoiding applications on loans for specific types of homes, like co-ops, condominiums, or multi-family homes. A lender may be able to approve your loan application and make money available directly to you.