Buying a home is a big decision! It is also one of the most expensive investments most people will make. Securing the funds necessary to make the purchase can be a challenge, but luckily there are people committed to finding reasonable loans for buyers. Two of the most important of these professionals are the mortgage broker and the lender.
What is a mortgage broker?
The terms “mortgage broker” and “mortgage lender” are sometimes used interchangeably, but they are two different, albeit similar, professions.
A mortgage broker is a licensed professional acting as an intermediary between mortgage lenders and prospective buyers. They work closely with potential lenders, but they do not use any of their money to help buyers secure a loan, nor do they determine their clients’ creditworthiness. Instead, they work with lenders on their clients’ behalf to determine interest rates and loan amounts. This is the main difference between mortgage brokers and mortgage lenders.
What is a mortgage lender?
Unlike a mortgage broker, mortgage lenders actually provide loans. Examples of mortgage lenders include financial institutions such as banks. Mortgage lenders work together with mortgage brokers to determine clients’ creditworthiness and loan terms. If the mortgage request is approved, the lenders disperse the funds according to the loan agreement.
Other differences between mortgage lenders and mortgage brokers
Another key difference between mortgage lenders and mortgage brokers is compensation. Mortgage brokers are typically paid depending upon the final mortgage term, while mortgage lenders are paid via various charges and fees which the borrowers pay. Borrowers can learn more about how much they might be required to pay by asking for a “good faith estimate” from their lenders.
Are you interested in learning more about mortgage brokers and mortgage lenders and what they can do for your home loan? Reach out to our experienced team today!