The Difference Between Mortgage Lenders and Brokers

The differences between mortgage lenders and brokers are not well understood by the general public. A mortgage broker is someone who can offer you competitive rates and terms on loans, but they're not a lender themselves. Mortgage brokers work with many lending institutions to make sure that borrowers get what's best for them in terms of interest rates, fees, etc.

What is a mortgage broker vs a mortgage lender

A mortgage lender is someone who provides loans directly to people without the use of a middleman like a broker or agent (although some lenders do employ agents). Lenders fund mortgages with their own money or borrow from institutional investors in order to lend the funds needed for the transaction. The borrower then repays the loan over time either through monthly payments or one final payment called "amortization."

While a lender can be a bank, credit union or other financial institution, many home buyers may never actually deal with the actual lender. It's common for borrowers to work exclusively with a broker. A broker offers expertise in finding the best loan product and securing competitive terms and rates. Their main objective is to provide borrowers with the best possible deal.

Why it matters to you as a home buyer

If you are a home buyer, it's important to know the difference between the two so you can make sure to work with someone who can offer you the best product. A lender will be the one that funds the mortgage, but a broker offers expertise in finding the best loan product and securing competitive terms and rates. They can help borrowers get pre-approved for a loan and find the best rates available in the marketplace.

The better understanding you have of these two roles, the more informed your choice will be when it comes to choosing an expert that suits your needs. A good mortgage broker or lender is worth their weight in gold and can save home buyers tens of thousands of dollars over the course of their loan.

Which one is better?

Which one is better? Mortgage brokers seem to be the best option for most people, but that doesn't mean you should refuse to work with a lender. If you're not comfortable with the process of applying for loans, hiring a broker can be beneficial. While you may come across a good lender on your own, it can be difficult to find information. Working with brokers gives you access to the latest loan products and rates from lenders that may not publicize them or make their rates available directly to consumers.

If you know what type of loan suits your needs and wants and you're ready to begin the process, you can go directly to the lender yourself without a broker, although there might be better loan products out there that are not available direct to consumer. If you need more guidance in choosing loans or want better service overall, it's best to work with an experienced broker who understands your needs and wants.

Conclusion

It's important to know the difference between mortgage lenders and brokers. In most cases, a broker is your best option because they offer expertise in finding the best loan product and securing competitive terms and rates. They can help you get pre-approved for a loan and find the best rates available in marketplace.

Although there are some situations where it might be more beneficial to work with a lender instead of an agent or broker, this is not usually the case for most home buyers, especially if they need more guidance. In general, it's best to work with an experienced broker who understands your needs and wants.

Brian the Lender (who is actually a broker!) will help you take full advantage of all the best loan options out there. Give him a call at 706-973-7933 to see how he can help you make the homebuying process as easy and smooth as possible!