Why choose a Mortgage Broker
over a Mortgage Bank/Loan Originator?
First thing first, you might be wondering what the difference is. For a little foundation, below are some standard terms you may come across when researching where or how to get a loan.
Borrower: The person applying for the mortgage in agreement to pay it back later according to the agreed-upon terms. There can be multiple borrowers per loan.
Mortgage Lender: A mortgage lender is a mortgage bank or financial institution offering and underwriting home loans. Lenders will use specific guidelines to verify clients' credit and ability to repay a loan. The lender will set the terms, interest rate, repayment schedule, and other critical aspects of the client's mortgage.
Retail Lender: A retail lender lends money to individuals or retail customers. Lenders can include banks, credit unions, savings and loan institutions, and mortgage bankers. They may or may not offer mortgage loans, car loans, checking and savings accounts, or other consumer products.
Mortgage Broker: A mortgage broker serves as a middleman between the borrower and various mortgage banking institutions. The broker takes the application, checks credit and income, and often handles much of the underwriting and processing, but ultimately the chosen lending institution will approve and fund the loan. Instead of a borrower having to shop around for the best rate and mortgage solutions a mortgage broker can do that for them. A mortgage broker is self-employed but may have their license held under a managing broker.
Mortgage Banker/Morgage Loan Originator (MLO): A mortgage banker/mortgage loan originator works for a lending institution that funds loans at closes with its own money. Most retail banks and credit unions employ mortgage bankers.
Underwriter: An underwriter works for an insurance, investment, loan, or mortgage company. They assess everything from a client's credit report to their health to determine if they should take on an applicant's contract based on their calculated level of risk.
To try to put it more simply, when a borrower searches for a loan, they will work with someone (a mortgage broker/mortgage banker/loan originator) to see what they qualify for and whom they'll apply to get the loan from (the lender).
The lender employs the underwriter to take a fine tooth comb to the borrower's situation and the property involved to make sure the minimum requirements are met to qualify for the loan that has been applied for.
Why choose a Mortgage Broker?
1 / Expertise
A mortgage broker is an expert at mortgages because they don't do anything else (like car loans, checking/savings accounts, etc.)
2 / Less work for you
A broker will do the heavy lifting by shopping multiple lenders to find the best rates and products for your needs (instead of you having to shop around). Instead of being limited to only the products 'they' (i.e., their employer) offers, they can choose the BEST product and rate options available.
3 / Low rates
A broker can offer wholesale interest rates - some of the lowest in the industry!
4 / Longevity
Typically, a broker is here for the long haul- not just a one-time transaction! As opposed to getting clients from their employer, broker's clients are a part of their mortgage family, and they will continue to look out for your happiness and well-being!
5 / Versatility
A broker offers more loan programs and solutions than banks/retail lenders
6 / Technology
A broker can offer technology that lets you apply and get pre-approved for your mortgage from anywhere with the internet and track your loan progress to closing!
7 / Speed
A broker can get you to the closing table and into your dream home faster (sometimes 20 days or less).