Whether you are a first-time homebuyer or you’ve done this before, it’s easy to stumble over the lingo that gets tossed around during the mortgage process. One common misconception is that lenders and mortgage brokers are essentially the same. This couldn’t be farther from the truth, and understanding the differences between the two will ensure success when it’s time to apply for a mortgage.
What Is a Mortgage Lender?
A mortgage lender is a financial institution, such as a bank, that loans money directly to borrowers who want to purchase real estate. Each mortgage lender offers a different selection of loan products that may or may not meet your needs.
Let’s look at a relatable example: Think of all the fast-food restaurants you know. Some offer hamburgers, others offer chicken, some specialize in tacos, and a few feature a combination of different foods to please the masses. Mortgage lenders are the same way. One lender’s mortgage “menu” might not do anything for you, while another might have multiple options that suit your fancy.
A Mortgage Broker’s Role
A mortgage broker serves as a liaison between borrowers and lenders. In many arenas, it’s our instinct to get rid of the middleman, but when it comes to mortgages, the middleman is a helpful tool to connect borrowers to a loan program that works.
If you sit down with a mortgage broker, you are probably about to part with a lot of money! A mortgage broker will help you understand your loan options so that you can make an informed decision on how you want to spend it.
Working Directly With a Lender: Pros and Cons
If you decide to work directly with a lender, you might have more control over which lender you select. If you partner with your own bank, you might even get a loan with better rates and terms than non-customers. You’ll also get to skip mortgage broker fees.
Sound like a good plan? Read these downsides before you decide:
- Finding a lender that you love takes a lot of time.
- Some lenders only work through mortgage brokers, and you won’t have access to those.
- If you’re only willing to work with a single lender, you’re limited to the options they offer.
Why Should I Work With a Mortgage Broker?
As you maneuver through the application process, a mortgage broker can be a valuable resource and a trusted friend. Here are a few reasons why it’s a good idea to work with one:
- Mortgage brokers offer far more loan options than a single lender.
- You might have access to special broker-only rates that could save you thousands of dollars.
- A mortgage broker’s industry knowledge can save you from making a costly mistake that you will need to deal with for the life of your loan!
Contact Us Today!
Are you ready to begin your mortgage journey? Contact MortgageDepot today to discuss your available loan options with a professional.
Connect with one of our loan consultants to learn more.
