Unlike a “mortgage broker”, the mortgage company continues to close and finance the loan directly. Because these companies only offer home loans, they can streamline your process much better than a bank. This is a big advantage, meaning that your loan can be closed faster.
Mortgage BrokersOffer the Convenience of Being a One-Stop-Shop.
This eliminates the need to visit multiple lenders to try to get the best rate and, ultimately, the approval of a mortgage. And consumers won't have multiple inquiries on their credit reports, since they only have to visit one person to get the best possible loan. Traditional banks offer a limited range of mortgage products, and interest rates are often above industry averages. Traditional banks are a good option for homebuyers who prefer to work under a well-known bank name and who don't mind slower processing times.
To do this, a mortgage broker sits down with his clients to assess their needs and their financial situation. Investopedia's best overall option for direct mortgage lenders is Quicken Loans, better known as Rocket Mortgage. Mortgage brokers can also work with borrowers who have difficulty obtaining approval through the automatic underwriting process from direct lenders due to a recent bankruptcy, poor credit, or unstable employment. If you prefer not to receive dozens of calls from mortgage brokers, you can search for them directly through sites that bring together local and independent mortgage brokers from all over the country.
While a mortgage broker is a one-stop-shop for multiple options, their fees come from the lender, so well-qualified buyers can get better rates and commissions by eliminating middlemen. Whether it's better to work with a mortgage broker or get a mortgage loan directly from a bank depends on your financial situation and your preferences. Mortgage lenders handle all the functions associated with starting a mortgage and obtaining money for its closing. Because brokers are intermediaries with thousands of relationships with lenders, their competitive advantage is found in atypical and niche mortgage situations.
To get the best of both worlds, get loan quotes from at least one broker and bank when looking for a mortgage to see which one can offer you the best deal. Some lender sites, such as Rocket Mortgage, also have a search engine that will connect you with local mortgage brokers. Specialty lenders that only provide home loans, such as Rocket Mortgage or Better Mortgage, are generally included in the category of banks. For people who don't want the hassle of contacting different banks, mortgage brokers are a better option.
A mortgage broker may charge a fee like a real estate agent, but it can also save you time and stress by presenting you with several loan options and advising you through the home loan process. However, if your situation is uncommon, for example, if you are just self-employed or are buying a condo in a new building, a mortgage broker may be the best option. If you already have business with a bank or credit union, it might be worth considering applying for a mortgage directly from that institution instead of working with a broker. 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.