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If you're buying a home, chances are you'll need a mortgage, but did you know there are big differences between mortgage brokers and bank loan officers?
The loan officers at a bank, credit union or other lending institution are employees who work to sell and process mortgages and other loans originated by their employer. They often have a wide variety of loans types to draw from, but all loans originate from one lending institution.
The loan officer takes your application and works to find a home loan that suits your needs. If your personal credit is approved, the officer moves forward to process the purchase.
Mortgage brokers are professionals who are paid a fee to bring together lenders and borrowers. They usually work with dozens or even hundreds of lenders, not as employees, but as freelance agents. Think of mortgage brokers as scouts.
They find and evaluate home buyers, analyzing each person's credit situation to determine which lender is the best fit for that person's needs. The broker submits the home buyer's application to one or more lenders in order to sell it, and works with the chosen lender until the loan closes. A good mortgage broker can find a lender for just about any type of credit.
A local or online mortgage broker may find you a lender in another part of the country. An online bank might not have a local office where employees can help you one-on-one, however, with the technology that is available today, staying in communication with a online broker 3,000 miles away can be as easy as clicking on a mouse.
Using a local lenders can sometimes be a plus. Their staff generally understand the specifics of local properties, but a distant lender who doesn't will delay closing until questions are answered.
Mortgage brokers can often find a lender who will make loans that a bank refuses--problem credit is one example. Loans for unique or commercial properties might be easier to secure through a mortgage broker.