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What Exactly IS the Difference Between a Mortgage Lender and a Mortgage Broker?

Mortgage Lender vs. Mortgage Broker

So you’ve decided to purchase a new Ann Arbor home and have been researching the home buying process on the web. While reading through the many sites, blogs, and pages of information, you may notice the terms ‘Mortgage Lender’ and ‘Mortgage Broker’. While they are the same in many ways, there are also differences between the two. They are similar in that they both council you on the types of loans available, take the mortgage application from you, process the loan, charge lending fees, and make a commission off the mortgage they sell. Following is a brief summary of the difference:

A Mortgage Lender is an individual bank that directly loans you money to purchase a home. This can be especially beneficial if you are using a local lender or already have worked with them in the past. Because you are working directly with that bank, time may be saved during the loan process. Some lenders can offer a portfolio loan, if you don’t fit the normal secondary market rules.

A Mortgage Broker is an intermediary between the lending institution and the borrower. They represent multiple banks. They shop hundreds of lenders to find the best loan package for your situation. This can be very beneficial for those with unique circumstances or problem credit. A mortgage broker can have more flexibility because they are not tied to the constraints of a single institution.

Since interest rates depend on the secondary market and all lenders get their rates from the same place, your individual rate depends on what your lender or broker offers. Be sure to always ask for a good faith estimate, look at the fees involved with your mortgage, and have them explained in detail. This is also the point where you can negotiate on some of these fees.

Is a mortgage lender or mortgage broker better for you? Well, that depends on your individual situation. If you still aren’t sure, contact us – we’ve worked with both types and can give you a recommendation based on our years of real estate experience. If you’re thinking of purchasing a new home in the future, be sure to check out our Ann Arbor real estate website where you can search for Washtenaw County homes, see all Ann Arbor subdivisions, and use our mortgage center!

 

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