Should I use a Mortgage Broker or a Bank?

If you’re looking to refinance or buy a new home you may come across two terms that seem the same but are not. The terms, mortgage broker and loan officer, both refer to someone who works in the mortgage industry. Mortgage brokers work for you by finding a mortgage lender and the right loan to fit your needs. On the other hand, loan officers are employed by a company like a bank and work with you to find a mortgage. They’re paid through the company they work for.

Mortgage brokers are independent consultants who work for both the homeowner and the mortgage lender. In other words, they act as a facilitator to help bridge the gap between you and the lender. They don’t loan you the money but instead find a lender who will lend it to you.

When you start the process, the broker has you fill out a loan application and gets an idea of your financial situation and pulls your credit. They then take your situation to various lenders to find loan options for you to choose from. Once you settle on a loan, they work with the lender on your behalf until you close.

Brokers develop relationships with many different lenders and institutions and are able to shop around to find you the best loan for your needs.
They can be good for people with low credit scores, less-than-perfect credit or the perfect borrower looking for the lowest rate and does not have the time to shop all the banks. They do all the legwork when it comes to the mortgage including finding options, and filing paperwork.

If you decide to work with a broker, make sure to read reviews, and if possible, choose someone a friend or family member has worked with. When you find a broker, ask about their experience level, the type of relationships they have with lenders and their license information, all brokers are required to be licensed.

A loan officer is an agent employed by a lending institution. They work directly with the homeowners to take them through the mortgage process. They’re also called mortgage bankers, Home Loan Experts, mortgage planners, mortgage consultants and mortgage loan originators.

Like a mortgage broker, a loan officer is going to have you fill out an application and pull your credit report to get an understanding of your financial situation. The loan officer will then recommend the best loan for you out of their company’s loan options. Not all loan officers are required to be licensed.

Loans options are based only on that loan officer’s company. You’re expected to do more of the work to provide the lender with the details of your situation and mortgage. Some lending institutions have large teams of people you’ll be working with, so the service can be impersonal.

Whether you use a mortgage broker or a mortgage lender, the fundamentals of the mortgage process are the same. But sometimes, the most important difference isn’t between a broker and a loan officer – it’s between a loan officer at a bank versus one at a lender whose primary focus is mortgages.

There’s the obvious difference that you can do all of your banking, car loans and other financial transactions at a bank along with handling your mortgage, but working with a bank can also be more challenging if you’re looking for loan options.

Oftentimes, you’ll find that mortgage brokers have more loan programs to choose from than banks do, so you can choose one that better fits your financial situation. As you can see, there are some big differences between working with a mortgage broker and working with a loan officer.The choice often comes down to working with someone you trust.

If you have any questions about mortgage professionals or the mortgage process in general, you can call 863-409-8909.