The decision to buy a home comes with a lot of important considerations. Choosing a home loan provider is one of them. As if the process wasn’t complex enough already, you also have to decide between two different types of mortgage financers. Should you work with a mortgage broker or a lender?
The key to finding an answer to this question is to understand the difference between the two. This is exactly what we’re going to help you with today. Let’s dig a little deeper to find out what sets the two home loan providers apart from one another to help you choose the right one for yourself.
What is the difference between a Mortgage Lender and a Broker?
A mortgage lender is typically a financial institution (but can also be a private mortgage lender) that provides the financing to home buyers. On the other hand, a mortgage broker is an individual or a firm that helps you find the best mortgage lender.
Brokers don’t lend you money. They only act as an intermediary in the process and connect home buyers with the lenders, also called direct lenders.
Should You Work With a Mortgage Lender or a Broker?
The key to deciding which of these mortgage financing professionals is right for you is to understand how they work and consider the pros and cons of each. Keep reading to find out!
Mortgage Lenders
A mortgage lender can be a bank, credit union, or private lender. Each has their own terms and conditions and have the liberty to decide their own interest rates, depending on an individual’s financial credentials.
Working directly with a mortgage lender may seem easier, but you will want to submit applications with multiple lenders to see who is offering you the mortgage at the best rate and terms.
Mortgage Brokers
A mortgage broker doesn’t lend you money. Their job is to help you find the best lender according to your financial situation.
Mortgage brokers work with multiple lenders. When they receive an application for a home loan, they browse through their database to find the best match for the borrower, i.e., a lender offering the most competitive rates and terms based on the applicant’s financial credentials.
The Final Word
Mortgage financing is one of the most important and tricky tasks of the home buying process. Therefore, it’s best to take your time to decide who you want to work with. Although you will ultimately be working with a lender even when you choose to go through a mortgage broker, taking this route makes it less likely that you end up with the wrong lender. A broker shops around for you, making it easier to evaluate, compare, and choose the best home loan provider. If you’re looking to get a home loan in Indiana, Northwest Mortgage can assist. Get in touch with us to find all your options.
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