Mortgage brokers and lenders offer two different ways to go about getting a mortgage. The main difference is that brokers only work with one or two lenders at any given time, while lenders work with many different brokers.
Mortgage brokers are usually paid by commission, which means they make money when you take out a loan with them. They’re not bound by any rules or regulations and can be hired by anyone looking for a mortgage.
There are two types of brokers: direct and indirect.
A direct broker works for the lender who makes you the loan, so they earn their commission from the bank or lender that actually makes the loan.
Indirect brokers don’t work directly for a bank but instead work for an agency that pays them commissions based on how many loans they’ve helped people secure.
Lenders act as intermediaries between borrowers and other financial institutions in order to facilitate the transaction process. They’re regulated by state laws and must abide by strict standards when it comes to making loans, such as verifying income and assets, conducting credit checks and making sure applicants have enough money to cover their monthly payments.
Choosing who to work with may be dependent on your time, membership, comfort and affordability. It is important to do your research before working with any mortgage lenders or brokers, but it is more important that you feel helped. You should never feel pressured to work with any individual mortgage lender or broker, especially if you feel like they aren’t solving your needs.