Mortgage Broker vs. Direct Lender: An Overview
The mortgage industry is full of individuals and companies that help people get access to financing for one of the biggest investments in their lives. These entities include mortgage brokers and direct lenders. While they may provide services to people seeking mortgage loans, they are very different. 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 whether you qualify for the loan and, if you do, hands over the check.
Mortgage Broker
Meet your local licensed mortgage broker.
He is not a big corporation or a bank.
He does not advertise on TV.
He does not do car loans, trade stocks or offer checking accounts.
He does one thing, and does it better than anyone else.
He shops for great deals on mortgages.
And a better mortgage can save you time, frustration and most importantly money.
Get an expert who shops on your behalf.
Bank
Meet your local bank.
It's a financial institution or private entity that actually provides the loan for a mortgage.
They advertise on TV.
They have a long-standing relationship with their customers and this may help secure a better—or bigger—loan amount, not to mention a better interest rate.
They deal directly with the consumer, the two can communicate effectively with one another rather than having to rely on someone else to relay messages back and forth.
Dealing with them directly can also mean not taking a hit to your credit score if you're applying with with a broker you may have to apply to multiple lenders within a short period of time.
Special Considerations
Consumers aren't obligated in any way to choose between mortgage brokers, banks or any direct lenders. In fact, they can call both to compare their rates and judge which route they want to take.
A bank/direct lender may be a good place to start, especially for those who have a good relationship with their own financial institutions. For people who don't want the hassle of contacting different banks, mortgage brokers are a better option.