Mortgage Brokers vs Lenders
The difference between mortgage brokers and direct lenders can be confusing. This is understandable because they do many of the same things. Both can walk you through the mortgage process, help you understand any legal complications that may arise, and try to get you the best possible mortgage option and mortgage rate (direct lenders can only provide rates from one source – themselves).
Direct lenders are who will be giving you the loan whereas mortgage brokers represent multiple lending sources, allowing you to compare multiple rates at any given time, without having to run your credit to get you multiple rates. Brokers act as the intermediaries between the lenders and borrowers. People generally prefer mortgage brokers because they want to get multiple options from multiple lenders, but others may want to get through the mortgage process as quickly as possible so they would prefer the direct lenders and less options.
Direct lenders are usually licensed to lend to anyone in all 50 states while brokers may only be licensed some states. Obviously, this would be a problem if you’re trying to work with a broker who is not licensed in your state, in this case a direct lender or a local bank may be the right option.
Mortgage lenders have to charge certain fees and costs for processing the loan, but brokers may not have these fees.
If you have bad credit history and are looking to get a mortgage loan, you’ll most likely be better off with a direct lender instead of a mortgage broker.
In the end, it’s always up to the borrower. If the goal is to receive multiple options and multiple rates, going with a broker is the way to go. If the credit score is sub-par, going with a direct lender or local bank may be a better fit.