Ready to start your mortgage journey?
First off, you should know that there are two main avenues from which you can obtain a mortgage: mortgage brokers and direct lenders. While the end result may be similar, the options and services offered by the two are very different.
What is a Direct Lender?
If you work with a direct lender to get a mortgage, you’re most likely working with a bank or credit union. The loan officer who shows you loan options, discusses interest rates, and compiles your loan application works directly for the loan originating entity.
Direct lenders can be great options, but their loan officers are limited in the choices they can offer. A direct lender loan officer can access only products available at the financial institution.
If you want to shop loan products and have more interest rates and loan terms options, you probably want to connect with an experienced mortgage broker.
What is a Mortgage Broker?
A mortgage broker is an individual who works independently or for a company and acts as an intermediary between you and direct lenders. They assess for financial circumstances, review your drafted loan application, and then shop between loan providers to find the ideal product for you.
Unlike when you work with a direct lender, you are not restricted to the options available by one financial institution. Borrowers with unique finances or wavering credit usually benefit from working with a mortgage broker.
It’s a good mortgage broker’s job to bring value to the prospective borrower. For example, self-employed borrowers will have to provide significantly more documentation to a lender than those with traditional employment. Your broker will review your income, find the best product, and then guide you through the loan application and supporting documentation process (which can be lengthy). Those who are self-employed may want to connect with a broker well before purchasing a home so they can understand how they should structure their income for mortgage success.
Think of a mortgage broker as your one-stop shop for loans. Instead of reaching out to several banks for rates and loan products, you have someone to do that for you. You get the convenience and confidence to get the best product to suit your needs. You won’t need to field phone calls from different lenders or worry about your credit report getting hit by multiple inquiries.
For most prospective borrowers, mortgage brokers offer the best option for finding a loan product and purchasing a property, especially in today’s lending environment when interest rates are changing rapidly.