Overview
There are different types of mortgage lenders.
A mortgage lender can be found at a bank, credit union or any other
lending institution. There are also mortgage brokers who act as
intermediates between you and the lending institution. You might be
expected to pay the mortgage broker a service fee for his/her services.
How It Works
If you are planning to apply for a mortgage loan at a bank, credit union or other lending institution, you will have to meet the loan officer. They are people who work to sell and process mortgages and other loans initiated by their employer. The loan officer will scrutinize your application and then try to find a loan that best suits your needs. If your personal credit is approved, the officer processes your loan application.On the other hand, mortgage brokers are professionals who are paid a fee to connect lenders with borrowers. They work with dozens, or even hundreds, of lenders. They are freelancers and are not obliged to use any particular lender. Mortgage brokers are sort of like scouts, who find and evaluate the credit situation of mortgage seekers to figure out which lender would fit them the best. The broker then works with the lender to complete the loan transaction. A good broker can find a lender for both good and bad credit.
Benefits
Both local lenders and mortgage brokers have their own advantages and disadvantages. A local or an online broker could find you a lender in another part of the country. On the other hand, an online bank may not even have a local office where there is someone to help you in person.Local lenders can understand aspects like the types of heating system, septic system, or other locally used terms, which may not be understood by the out-of-town lenders. An added advantage is that, by searching far and wide, a broker can find you the best possible terms for a mortgage, which will ultimately save you money.