Are you getting the best service?  Are you getting the best rate?  Do you have an advocate working with you to help you through? Typically, you have two options: a direct lender/bank or a broker.  Let’s review the difference between the two. 

• A broker acts as an intermediary, helping you identify the best lender for your situation and pulling together all the information needed for the mortgage application.
• A direct lender is a bank or other financial institution that will decide whether you qualify for one of their specific loan programs.

The benefit of using a broker is that we do the “shopping” for you.  We have relationships with several lenders who offer a wide variety of programs with minimal or no overlays (tighter lender-specific requirements).  This allows you to have the confidence that you are getting the BEST mortgage for your specific situation and not just what the direct lender has to offer.

10 Reasons Why Brokers Are Better

1. Clear cut communication.  The mortgage industry can be challenging to navigate. We can help you understand the lengthy process.  We can solidify a competitive interest rate, typically with lower fees, and ensure you close on time or even early.
2. We are licensed and regulated financial professionals. We do a lot of the legwork — gathering documents from you, pulling your credit history, and verifying your income and employment — and we use this information to find the best options for you across several lenders.
3. We help you comparison-shop. We obtain a variety of quotes from multiple lenders and present you with the best option to suit your specific needs.
4. We save you time.  It can take hours to apply for different loans, with back-and-forth communication involved with underwriting the loan and ensuring the transaction stays on track. We can save you the hassle of managing that process.
5. We work on your loan from start to finish. We are invested in you throughout and therefore will be with you every step of the way.  Banks and direct lenders use the “assembly line” mentality, handing you off to other people throughout the process which can cause frustration, confusion, and delays.
6. If your application involves challenges, we have the capability to find a lender who can provide a competitive interest rate, without significant overlays, whereas a direct lender/bank would be limited to their own product guidelines.  Direct lenders/banks do not shop with different lenders for you.  For example, a direct lender/bank might not even be able to qualify someone with a 600 credit score, but brokers have lenders that would allow such a score for traditional financing (FHA, VA) without severe negative impacts to the interest rate, process or closing.
7. Just like your real estate agent, we work for you!  We don’t get paid unless you close your loan. For this reason, we are more accessible to you than lender/bank employees. When you have questions along the way, it’s easier to get the answers you’re looking for more quickly and more thoroughly.
8. We can undoubtedly find more competitive mortgage rates than direct lenders/banks.  We are paid to shop for the best rates and loan programs.
9. Personalization! You can meet with us face to face, in our brick-and-mortar office or completely online, and get your questions answered by ONE person. That may be more reassuring than talking to a different person every time you contact the national call center for a direct lender/bank.
10. Our volume is much less than direct lenders/banks.  We care more about our clients, their well being, and their overall satisfaction.  Rest assured: you will be happier with the process and the service you receive from us.

Why are brokers better?

A broker acts as an intermediary, helping you identify the best lender for your situation and pulling together all the information needed for the mortgage application. A direct lender is a bank or other financial institution that will decide whether you qualify for one of their specific loan programs.Apr 30, 2020

Actually, for most home loans, a mortgage broker is free! In fact, in most cases, you'll actually pay less to use a broker than going directly to a bank since they can often negotiate a better deal for you.

So for these people, using a mortgage broker is often the next best option. Brokers typically have access to far more loan products and types of loans than a large-scale bank, whether it's FHA loans, VA loans, jumbo loans, a USDA loan, or simply a borrower with bad credit.

Mortgage Brokers vs. Banks

There are mortgage brokers, who work as middlemen between banks/mortgage lenders and borrowers on the wholesale end to secure financing for homeowners.

And there are banks/lenders that work directly with homeowners to provide financing on the retail level, known as consumer-direct lending.

What Is a Mortgage Broker?

A mortgage broker is an intermediary between a financial institution that offers loans that are secured with real estate and individuals interested in buying real estate who need to borrow money in the form of a loan to do so. The mortgage broker will work with both parties to get the individual approved for the loan. They also collect and verify all of the necessary paperwork that the lender needs from the individual in order to complete the home purchase. A mortgage broker typically works with many different lenders and can offer a variety of loan options to the borrower they work with. 

What Does a Mortgage Broker Do?

A mortgage broker aims to complete real estate transactions as a third-party intermediary between a borrower and a lender. The broker will collect information from the individual and go to multiple lenders in order to find the best potential loan for their client. Finally, the broker serves as the loan officer; they collect the necessary information and work with both parties to get the loan closed. 

How Much Does a Mortgage Broker Cost?

A mortgage broker may be compensated through a combination of fees paid from borrowers and commissions that are paid out by the lending institutions who want them to originate loans. The costs vary greatly but a mortgage broker generally earns between 1% and 3% of the total loan amount. The total amount paid by the borrower will vary based on the type of loan, what broker is used, and how much the broker is earning in commissions from the lending institution. 

When Should You See a Mortgage Broker?

You should use a mortgage broker if you want to find access to home loans that aren’t readily advertised to you. If you don’t have amazing credit, if you have a unique borrowing situation like owning your own business, or if you just aren’t seeing mortgages that will work for you, then a broker might be able to get you access to loans that will be beneficial to you. Many individuals prefer to work with a broker regardless of their situation because it gets them access to lenders they wouldn’t think to look for. Mortgage brokers may also be able to help them qualify for a lower interest rate than most of the commercial loans that are available.