Should I Get My Mortgage Through a Broker or Directly Through a Lender?
When you are in the process of looking for a mortgage, whether to purchase a home or re-finance an existing mortgage, you will most likely be working with either a mortgage broker or a loan officer working for a lender. So, what is the difference?
Loan Officer Vs. Mortgage Broker
Loan officers working directly for lenders sell only their lenders’ loan programs. They are usually very well-informed about the programs their company has to offer, as those are the only programs they really need to know about. Mortgage brokers on the other hand, work with multiple lenders and need to know the general guidelines about their lenders’ programs. They will take your application, pull your credit report and forward that information to the lenders that they believe can offer you the best terms.
Advantages and Disadvantages of a Mortgage Broker
The advantage of working with a mortgage broker is that they have access to a huge number of programs and can negotiate with the account executives from multiple lenders to see who can get them the best rate. The downside of that is the fact that the brokers make their living from the commission on your loan, paid either in the form of points or from the lender in exchange for a higher interest rate.
Advantages and Disadvantages of a Lender
The advantage of working with a lender directly is you are effectively eliminating the middle man. For example, if you have accounts with a local bank and can obtain a mortgage from them directly, you could save a lot of money by working directly with the bank. However, your local bank will not have the number of programs available to you that you would have access to if you were working with a broker.
Unconventional Loans
It’s always a good idea to work with a mortgage broker if you have any adverse credit history, gaps in employment, difficulty verifying your income, purchasing a non-traditional property (e.g., log home, modular or manufactured homes) or for any other number of reasons that would place out of the category of traditional, conventional financing. Any broker who has been in the industry for a few years undoubtedly has experience closing some very unusual loan scenarios.
Research and Compare
Should you get your mortgage through a mortgage broker or from the lender directly? There is no definitive answer to that question. Remember that the main difference between lenders and mortgage brokers is that brokers don’t lend money–their job is to find the best lender for you. It may be a good idea to pursue both avenues, but beware–try to avoid having your credit report pulled multiple times in a short period of time. That can actually lower your FICO score and minimize the programs available to you.
