Mortgage Lenders Vs. Brokers: What's The Difference?

As you start the journey to secure a mortgage, one decision to make is whether to work with a mortgage broker or a mortgage lender. While both play essential roles in financing a home, understanding the differences between the two can be quite different. Here is what you need to know about choosing the right option for your mortgage needs.

What Are Mortgage Lenders?

Mortgage lenders are part of some sort of financial institution, like a credit union or bank, that provides a loan directly to a borrower. Each lender offers their own selection of loan products and has their own costs and fees associated with closing on the loan. It's the most traditional way of securing a mortgage, and chances are that there are lenders in your area that you can turn to.

What Are Mortgage Brokers?

Mortgage brokers are intermediaries that work with the lenders on your behalf. They are not the ones funding your loan, but they help secure the money that you need. A mortgage broker can be great at finding you a loan by doing all the legwork, which can help compare offers from multiple lenders and select the best one for you. Brokers also have a relationship with lenders in your area and can help secure lower interest rates by bringing them your business. 

Who Has More Expertise?

Be aware that a loan officer at a loan bank or credit union is only going to be familiar with the products that the lender offers. This can cause them to be very limited in terms of their knowledge of various mortgage products. However, a mortgage broker knows a wealth of information about the various mortgage products available, and they know which lender offers them. A broker will likely educate you about your options so that you can make an informed decision.

Who Provides Better Service? 

Anytime you work with a lender, you have direct communication with the entity that will let you borrow the money you need. While this can provide you with fast communication, you need to handle all of the communication. A mortgage broker works for you as an advocate and provides a value-added service of professional guidance. They'll let you know when things are going well or poorly and even help give you advice on what to do. You won't receive that same level of advocacy when working directly with a lender in your area. 

Contact a local mortgage broker to learn more.