At first, it might seem tricky to differentiate a mortgage broker vs lender. After all, both provide mortgage loans. While both brokers and individual lenders can help you with the same service, there are some important differences homeowners should be aware of.
Here is a basic guide to the difference between direct lenders and mortgage brokers:
Key differences between mortgage brokers & lenders
A mortgage broker connects borrowers and lenders, while the mortgage lender - a bank or financial institution - deals directly with the borrower. Brokers can help you with comparison shopping for different rates and facilitate the application process.
Working with mortgage lenders directly means you are in full control of every step of the journey - and any associated hassle.
Brokers are usually paid on a fee-based schedule, while lenders make their money through a variety of different fees and charges. Origination fees and interest are major examples of how lenders are compensated.
Which is better for me?
Choosing between a mortgage broker or a direct lender depends on a number of factors and personal preferences. A broker can be the more convenient choice for many borrowers, as they handle the process of contacting different lenders to find a good fit. However, for those who want full control of the homebuying process, going straight to the bank might be a better choice.
Other considerations
One thing to keep in mind is some lenders work exclusively with mortgage brokers, and some brokers are exclusive with certain lenders. This could mean working with a broker may limit your choices of lender and vice versa.
However, if you place a high value on convenience, a mortgage broker can save you significant time and effort in the mortgage process. If you prefer contacting each direct lender to crunch the numbers yourself, skip the broker and work directly with a bank or institution of choice.
About the Author
Wendy Wiegand
As a premier real estate agent in Carlsbad, I’m here to provide you with all the resources and information you need to buy or sell real estate. I work with buyers and sellers in Carlsbad, Encinitas, Oceanside, San Marcos, Vista and the surrounding areas and I’ve had extensive training in the latest real estate marketing strategies. I’m confident that I can offer you knowledge and tools most other agents can’t.
I believe in service, both to my clients and our community. When working with clients, you can be assured I am focused on providing the most comprehensive and dedicated effort so that you can achieve the best results possible when buying or selling real estate. I am also deeply involved in serving our community, as you and I all call it home. I have been a member of Rotary since 2003, have been an active member of the Carlsbad Chamber of Commerce since 2006, and serve on the board of the Agua Hedionda Lagoon Foundation. Perhaps my even deeper service to my clients and our community is Wiegand Realty’s participation in Business for a Cause.
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