When you’re shopping for a home loan, you can work with an officer at a bank or other lending institution, or you can choose to work with a mortgage broker. The end result is the same: a new house, but the two types of jobs are different.
Bank Loan Officers: Loan officers of a bank, credit union, or other lending institution are employees who work to sell and process mortgages and other loans originated by your employer. They often have a wide variety of loan types to take out, but they all originate from that specific lender.
The loan officer takes your mortgage application and works to find a loan product that meets your needs. If your personal credit is approved, the officer moves forward to process the home purchase transaction.
Mortgage Brokers: Mortgage brokers are professionals who are paid a fee to bring lenders and borrowers together. They typically work with dozens or even hundreds of lenders, not as employees, but as self-employed mortgage brokers.
Think of mortgage brokers as scouts. They find and screen homebuyers, analyzing each person’s credit situation to determine which lender is best suited for that person’s needs. The mortgage broker submits the homebuyer’s application to one or more lenders to sell the home and works with the selected lender until the loan is closed. A good mortgage broker can find a lender for almost any type of credit.
The mortgage broker working to guarantee your loan earns a fee for that transaction, and the better deal they get for a lender, the more they get paid. Don’t be too eager to reveal the interest rate you’d be willing to accept, let them tell you what terms they can get. Compare prices to make sure the terms are reasonable.
Many of the mortgage options advertised online are from mortgage brokers. What difference does it make? Maybe neither, but you should be aware of the differences between the two positions. A local or online mortgage broker can find you a lender in another part of the country. An online bank may not have a local office where employees can help you one on one.
Mortgage brokers can often find a lender that will make loans that a bank will turn down. Credit problem is an example. Loans for unique or commercial properties may be easier to obtain through a mortgage broker.