that you work with a mortgage broker or a
mortgage lender before you shop for a house. You don’t want to
end up falling in love with a home and then finding out you
can’t afford it. Getting pre-qualified or pre-approved for a
loan can help you decide what price range fits your situation.
So what’s the difference between a mortgage broker and a
mortgage lender?
A mortgage broker is basically a retail seller of a loan. They
get paid a commission from the lender and a service fee from
you. The service fee can include an origination fee, a
processing fee, a closing fee, and/or points on the loan. The
fees will be listed on the documents you sign at the title
company, on the day of closing. The advantage of using a
mortgage broker is that they have information on a wide range
of lenders and loans that can fit your needs. A mortgage
broker’s obligation to his/her customer is to find the best
rate possible and make sure all the documents are prepared by
the closing date. To do otherwise could cause the mortgage
broker to lose customers and tarnish their reputation with
other real estate professionals.
A mortgage lender is the actual institution servicing your
loan. A lender could be a bank, a credit union, or a
quasi-government company like FNMA or “Fannie Mae”. Sometimes a
lender will sell the loan to the open market, but still continue
to service it. The fee of a lender is typically less than that
of a mortgage broker. The mortgage broker, however, might find
you a better rate because they are not bound by the policies of
one institution. It is, therefore, debatable that going directly
to the mortgage lender for a loan will save you money.
Then who should you use? The answer is easy. Find the one who
gives you the best deal. All mortgage brokers and mortgage
lenders should tell you their fees upfront, so shop around. It
is also a good idea, in some instances, to use a lender
referred to you by your realtor. Realtors work with lenders all
the time and yours might have a good feel for one that is
reliable and honest. In the end, though, you should use the
mortgage broker or mortgage lender that is right for you.
About The Author: Michael A. Stazko is a food lover and founder
of http://www.buyandsellnorthtexas.com ,
http://www.bigdallasrealestate.com , and
http://www.bigsandiegorealestate.com .
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