Your mortgage broker or loan officer will be a key person in your home buying process. Your relationship with your mortgage broker or loan officer will begin even before you start shopping for your new home, and continue all the way through to the closing day. They will be there to answer all your financial home buying questions, facilitate your mortgage loan process, and guide you through the paperwork and steps needed to process your new home loan. The terms “mortgage broker”, “mortgage lender”, and “loan officer” are often used interchangeably, but there are some key differences. Before you head out in search of the best home loan type for you, let’s take a look at these terms, and the difference between these two types of home loan service providers.
Mortgage Broker vs. Loan Officer: What’s the Difference?
What is a Mortgage Broker?
Mortgage brokers shop around on your behalf to find the best loan type that fits your needs, and to secure as low an interest rate as possible for your home loan. Mortgage brokers coordinate with a variety of banks and lenders, and are a good option for homebuyers who may need non-traditional financing options to purchase a home.
What is a Loan Officer?
A loan officer can also be called a mortgage lender. A loan officer works directly with a specific bank or financial institution to bring you your home loan. Some mortgage lenders work for private companies, but many work with your local banking institutions. Some people may choose to partner with a loan officer who works at their local bank because they have accounts with that bank, but this type of relationship is not necessary for getting a home loan with a loan officer. This option can be a quicker process since you work directly with your lender instead of going with someone working in the middle of the process.
Mortgage Broker vs. Loan Officer
Both a mortgage broker and a loan officer charge fees for their services. Oftentimes, you’ll find that a mortgage broker’s fees are a bit higher than a loan officer’s fees. The mortgage process may take a bit longer with a mortgage broker because they act as a “middleman” between you and the lenders they are shopping. Using a mortgage broker might be necessary though for potential homebuyers who need a creative financing solution due to factors like a lower credit score.
Why do I need a Mortgage Broker or a Loan Officer?
If you want to buy a home and need to finance at least a portion of the purchase price, you will need a lender of some type to source the loan. Both mortgage brokers and loan officers are educated about various mortgage products so they can give you guidance on which direction would be especially good for you and your family’s home loan needs. Both mortgage brokers and loan officers work to make the home loan process flow as smoothly as possible. They are seasoned on the paperwork required, the financial information, and the loan paperwork processing steps necessary to move your home loan to completion.
Should I Choose a Mortgage Broker or a Loan Officer?
There isn’t one right answer that works best for everyone, and a lot has to do with your specific financing needs. But something that is certain is the need to shop around. You can start by asking the bank where you have existing accounts, inquire with friends and family about who they have used, and of course can ask your real estate agent to recommend a loan officer they work with a lot.
Remember, you will want to find a great loan officer or mortgage broker before you head out to start shopping for your new home so you know your preferred price range and can get pre-approved.
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Angie Kelley, Crye-Leike Realtors
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