A mortgage broker can offer a wider range of options and streamline the mortgage process, but working directly with a bank gives you more control and costs less. Many or all of the products listed here are from our partners who compensate us. Working directly with a lender might be a better option if you prefer to compare loan rates yourself. Or if you already have a relationship with a financial institution, that lender may be willing to offer a better rate than you could find through a broker.
Working with a broker can lead to higher fees and more costs. This is due to all the work and access that a broker gives you. Basically, the broker makes all the comparisons for you, identifying which lenders can provide you with the right program for your particular needs. Some of these loans can be quite complex, and the more complicated the loan, the more expensive it can be to approve.
The main advantage of a mortgage broker is getting help navigating the complex landscape of banks and lending institutions. A broker is likely to have more knowledge of the mortgage landscape than someone who is simply looking for a mortgage. This could help you determine right away if your bank or a mortgage broker is likely to offer you the best rates and terms. Mortgage brokers act as intermediaries or intermediaries, making it easier for borrowers to find the right loan.
The best route for you could come down to if you already know a good mortgage broker or a bank loan officer. Skipping a mortgage broker can mean going through the application process with more than one direct lender. For people who don't want the hassle of contacting different banks, mortgage brokers are a better option. A mortgage broker acts as an intermediary by helping consumers identify the best lender for their situation, while a direct lender is a bank or other financial institution that decides if you qualify for the loan and, if so, delivers the check.
When a prospective homeowner is ready to seek a mortgage, they may decide to consult with a mortgage broker. If your research finds that your current bank or credit union offers the best mortgage rates, find out if you can save more by financing your mortgage through them. Investopedia's best overall option for direct mortgage lenders is Quicken Loans, better known as Rocket Mortgage. For example, brokers can find the best mortgage lenders for first-time homebuyers or with a lender that offers loans with bad credit.
What a mortgage broker earns is that they will receive a commission from the lender, you, or both on the closing day. Mortgage brokers once had a risky reputation, so it's no surprise that many people are still hesitant to use them. People who are less qualified buyers or who buy less traditional properties will find it easier to find loans for which they can be approved through a mortgage broker than through individual direct lenders with generally stricter approval criteria. Some lender sites, such as Rocket Mortgage, also have a search engine that will connect you with local mortgage brokers.
Mortgage brokers don't anticipate loans, but instead offer a one-stop shop with access to several lenders, while a direct lender is a single entity that eliminates the middleman.