What separates mortgage brokers from mortgage lenders? Let’s dive into the differences:
Mortgage bankers (similarly referred to as “mortgage lenders”) work within a lending division or department of a larger bank to provide you with financing. Mortgage lenders play a crucial role at every step of the mortgage application process, fostering connections between both real estate agents and borrowers, and use these connections to craft adequate loan options. During a borrower’s mortgage application process, the mortgage banker essentially acts as a center for information flow and decision-making.
A mortgage broker is a financial institution that exists as an intermediary between borrowers and lenders. Mortgage brokers use the information of borrowers to help connect borrowers with a lender, a realtor, and other mortgage professionals. Although a broker will play an important role throughout the entire mortgage process, only the lender can decide whether or not you qualify for a loan and if so, what the terms of that loan will be.
Which is Best for You?
- If you don’t have that much free time, then working with a mortgage broker might be best for you. They will handle most of the paperwork and take care of most if not all interactions with the lender. A mortgage broker can also conduct comprehensive research in order to find a lender that best matches with your financial situation.
- If you already have a strong relationship with a bank, then it might be best for you to work with one of their mortgage lenders. Financing through a known institution can provide you with a sense of certainty that you wouldn’t otherwise get with an unfamiliar mortgage broker. Additionally, there may be perks for financing through your bank as a loyal customer.