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Why Get a Mortgage Loan through a Broker?

Homebuyers and individuals looking to refinance their existing property can choose to get a loan from a mortgage broker or work directly with the mortgage lender's loan officer. Before making a decision, it is vital to understand the difference between a mortgage broker and a loan officer.

Mortgage Broker vs. Lenders

If working directly with a lender to find a mortgage loan, the lender only provides and promotes loan programs that they carry. Therefore, borrowers receive detail information about specific loans, and the loan officer is available to answer any questions. On the other hand, mortgage brokers work with many lenders and offer a multitude of loans. A broker typically knows general or basic information about certain loans. There main objective is to connect buyers with lenders. Hence, a mortgage broker will forward your loan application and documentation to various lenders, and help you find the best deal.

Pros and Cons of a Mortgage Lender

If you choose to complete an application with a loan officer, you don't have to worry about a middle man. Plus, you won't pay a broker's fee, which allows you to save money on the loan. On the downside, mortgage lenders or banks offer fewer loan programs, wherein your choices are limited.

Pros and Cons of a Mortgage Broker

Mortgage brokers work with various lenders and have access to several loan programs. Whether you have good credit, bad credit, or self-employed, there is a loan for you. Moreover, brokers can effectively negotiate the best loan terms and rates on your behalf. However, mortgage brokers earn a commission, which means borrowers will either pay points on their mortgage loan, or accept a slightly interest rate from the lender.

Compare Different Loans

Deciding whether to use a broker or lender can be a hard choice. Some borrowers utilize both avenues and submit loan applications with a lender and broker. This method is ideal if looking for the lowest rate possible on the mortgage loan. However, having your credit report pulled by multiple lenders within a short period may damage your credit score, which lowers the number of available loan programs. If you have the perfect buying situation -good credit, solid employment history, available funds, etc - a loan officer may be the best option for you.

Alternative Loan Programs

On the other hand, individuals with unique or complicated circumstances may benefit from a mortgage broker. For example, do you have poor credit, self-employed, or a recent bankruptcy? If so, a mortgage broker is likely the best route. A broker can find a suitable loan to meet the needs of buyers with less-than-ideal situations. Alternative or unconventional loans are also perfect for real estate investors and individuals looking to buy manufactured or mobile homes.