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  • Writer's pictureDawn Munoz

Mortgage Broker vs. Mortgage Lender: What You Need to Know

Written by Dawn Muñoz, Vice President of Home Lenders of Georgia.

When it’s time to buy a home determining who will handle your mortgage is an

important decision. As an initial first step, you will want to decide whether to use a

mortgage broker or a direct mortgage lender, so understanding the differences between

the two is crucial.

A mortgage broker is a financial professional who brings borrowers and potential

lenders that they have an existing relationship together. Typically, the broker will have

a conversation with the borrower to better understand their unique current financial

situation. They will review important information such as credit score, income, assets,

investments, and liabilities. In addition, the broker will consider the borrower’s future

financial goals and will make suggestions as to what type of mortgage may be best

as well as how much the customer can realistically borrow. They will work with the

borrower to comparison shop for a lender that is a perfect fit. A good broker will have

a network of lenders at their disposal, even for complex financial situations. Mortgage

brokers are paid based on fees. In most cases, the loan origination fee charged by the

lender is paid to the broker. It is important to note that a Loan Officer that works for a

mortgage broker must pass a national test and obtain their license and will be required

to take continuing education courses yearly to stay abreast of industry changes and laws.

A mortgage lender is a financial institution or private business that directly loans

money for home purchases and refinances. Some borrowers choose to go with a bank

they already do business with. Each mortgage lender will have its own set of rules for

each loan that may be different from what the current industry dictates. Borrowers

will need to fit exactly into those guidelines. Depending on the size of the lender, the

borrower may or may not have direct access to the person processing their loan. In

the absence of a mortgage broker, the direct lender keeps the loan origination fee in

addition to earning interest throughout the life of the loan.

The choice between a mortgage broker or mortgage lender is always that of the

borrower and while neither choice is wrong, it is important to weigh the pros and cons

as they relate to you personally.

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