Need a loan for a house? You can get a home loan from a bank officer, another lender, or a mortgage broker. No matter which company you choose, the end result is the same: you get a new house.
Loan officers are actually people who work at a bank, credit union, or other place that lends money. Their job is to sell and process mortgages and other loans. They offer many different kinds of loans, but they all come from the same lender. Usually, the loan officer's job is to take care of the client's application and find a loan product that fits the client's needs the best. Once the client's credit is approved, the loan officer will start working on the transaction to buy a home.
On the other hand, mortgage brokers connect people who want to borrow money with people who want to lend it. They work on their own and usually for many different lenders. Mortgage brokers are like scouts in the mortgage business because they look for and evaluate people who want to buy a home. They also look at a customer's credit history to find the best lender for that customer. A skilled mortgage broker can find different kinds of lenders for different kinds of credit.
A mortgage broker makes money by getting a loan for a client. How much they get paid depends on how well the transaction goes. For your own protection as a client, it would be best not to offer any interest rate and instead wait for your mortgage broker to tell you what terms they can get. Then, try to shop around to make sure that the terms your mortgage broker gave you are fair. Also, be careful when looking for advertised mortgages online, since most of them belong to mortgage brokers.
When you use an online mortgage broker, you open yourself up to lenders in other parts of the country who may have better rates than the ones in your town. But there is a downside to this: most out-of-town lenders won't know about the unique things about where you live, like the heating systems and septic systems, or the terms and classifications used by appraisers in your area. All of these things make it take longer for an out-of-town lender to give loans.
Most mortgages are given by local banks, but this isn't always the best choice. They have underwriters who know a lot about the local properties and, unlike a lender from far away, won't slow down the loan process. Also, banks always close loans better and faster than any mortgage broker who works with a lender. But this doesn't work for all banks in general, since some banks really take a long time to process loans. On the other hand, mortgage brokers can find lenders who will give out loans that a bank would turn down. This is especially helpful if you have bad credit.
