Mortgage broker sand direct lenders have many things in common. Both of them conduct campaigns of advertising for attracting customers and both of them collect information on your financial status in order to decide whether to lend you money or not. Both can also help you to get a better understanding of the mortgage process and clarify any legal revelations to you. However, there are some differences between lenders and brokers that you need to know.
Direct lenders represent a single lending source while mortgage brokers may represent various lending sources. Brokers are intermediaries between several lenders and you. Using a broker is like using a bridge for shopping around in order to find the best interest rates. However, using this bridge may also consume your time for obtaining a loan.
There is a considerable difference in rates of interest when working with a lender or a broker even though all of them take their rates from the same place that is the secondary market. Brokers have access to lower rates of interest because they do all the work related to the loan, from generation to qualification to submission to closing. A lender will have two or three people working inside the bank and helping him to obtain the loan for you. These people will ask money from the lender for their help.
Lenders use specific program parameters to set their guidelines. They will either approve or reject your loan with no or less alternatives. A broker can find the program that meets the specific needs of your loan and submit it to the appropriate lender with certitude that the selected lender will approve your loan. Therefore, brokers will not waste your time by submitting your application to a lender who will reject it after the approval process. Since mortgage brokers are independent, they can make quick decisions about the way they can reduce your costs. However, you need to have a high credit score in order to gain more power in negotiating with them.
According to your needs and situations, you can choose to work with a mortgage broker or a direct lender.