Do you need to get a mortgage for a home you want to purchase? You may be a bit confused about the difference between working with a mortgage broker service or a direct lender. Here is what to know about the differences between these two ways to get your mortgage.
Direct Lenders
When you talk about mortgage lenders, you're referring to working directly with a company that will be giving you the money for the mortgage. There is not a third party that you are working with as an intermediary for all communication that you have with the direct lender, which makes communication more direct as the name implies.
Many people work with direct lenders because they are the most accessible way to get a mortgage. All you have to do is go down to your local bank and inquire about their mortgage services, and you can talk to somebody in person that will help you get the loan that you need. When working with a bank, you can even see some additional benefits from having other accounts with them. For example, you may be able to receive cash back on your mortgage by having the payments electronically transferred each month.
However, be aware that direct lenders can sell your mortgage to another company. While sometimes nothing changes and the direct lender still manages the loan, other times you need to change who you make payments to.
Mortgage Broker
A mortgage broker is going to help you find the best possible deal on your mortgage. They do this by having existing relationships with direct lenders and contacting them on your behalf. If you wanted to shop around for a mortgage on your own, you would need to do the work of communicating with each lender individually, which can be very time consuming. A mortgage broker will take care of all the communication for you.
One of the benefits of working with a mortgage broker is that they can sometimes get better rates than if you worked directly with a bank. This is perk the broker earns for bringing a lender a lot of business over the years. That said, it is still up to the lender to approve or deny your loan, with all of those decisions being out of the broker's hands.
Not sure if you should use a mortgage broker to secure the funding for your next home? Reach out to a mortgage broker for more information about their services.
