The main difference between a mortgage counselor and a broker is the training and experience needed to perform each job. While a mortgage counselor can discuss many financial aspects with you, you don't need to take any specialized training courses or need any professional qualifications initially. A lender is a financial institution that provides loans directly to you. A broker doesn't lend money.
A broker can work with many lenders. When you need to get a mortgage, there are so many options that it can be overwhelming. Your choice can have a big impact on the amount of time you spend buying a mortgage and how much you end up paying. By knowing the basic differences between three types of mortgage professionals: mortgage brokers, loan officers, and mortgage bankers, you can find out who can save you the most time and money.
Mortgage Brokers Will Look For Mortgages On Your Behalf. They can save you time and money by looking for the best deals available to someone with your financial profile, assuming you are honest, good at your job, and have relationships with many mortgage lenders. A little confusing, both individuals and companies that fulfill this role are called mortgage brokers. A Mortgage Broker Doesn't Lend You Money and Doesn't Approve Your Loan Application.
However, they will collect information about your income, financial obligations, and credit rating to see what types of loans you might qualify for and which lenders will offer you a loan. If a mortgage broker finds a loan that you want to proceed with, they will be the middleman between you and the lender. They will take your completed application, compile your supporting documents, and transmit any requests for additional information from the lender's underwriting department. Loan officers work for companies such as banks, credit unions, or direct online lenders that lend money to borrowers to buy and refinance homes.
They may be able to offer you several types of loans (Federal Housing Administration (FHA), FHA 203 (k), conventional and jumbo) if the financial institution they work for offers them. They may also be able to offer you different combinations of interest rates, points and opening fees for certain credit products. However, unlike brokers, all of these loans will come only from the loan officer's company, so your selection will be smaller. To receive offers from multiple lenders, you'll need to work with several loan officers at different companies.
If you choose to go ahead, a loan officer will take your loan application and submit it to your company's insurance department. They will be the middleman between you and the insurer, and they will help you close. Throughout these steps, a loan officer performs the same role as a mortgage broker. The Big Difference Between Working With a Mortgage Broker vs.
A loan officer comes at the beginning, during the buying phase, where you are trying to find the best deal on a mortgage. A mortgage banker can originate all types of loans, so you will have many options in terms of loan products, just like you would with a mortgage broker or some loan officers. In addition, they work with all types of applicants, including those who need an FHA loan because of their more relaxed qualifications or military service members who want a VA loan. The best way to choose between a mortgage broker, a loan officer, and a mortgage banker is to talk to all of them.
Many people are intimidated by the unknown mortgage process that they don't turn around. It's a big mistake that can cost you thousands of dollars, if not tens of thousands of dollars. You can and should seek quotes from more than one broker, more than one banker, and several loan officers. Set aside one day, or two consecutive days, to collect all your quotes.
Market conditions change frequently, as does your credit report. You won't be able to make accurate comparisons if you receive quotes days or weeks apart. That said, if you don't have a salaried job, a credit score of 700, and a low debt-to-income ratio, you can save time by bypassing loan officers. If you are self-employed, retired, using assets instead of income to qualify, or belong to some other innovative applicant category, a mortgage broker or mortgage banker may be better suited to you.
They typically have the experience and relationships to quickly find the right funding source and have more options to choose from than loan officers. Many people say that their mortgage broker can get a better rate than if they went to the banks themselves. You can save time by using a mortgage broker; it can take hours to request pre-approval with different lenders, then there's the back and forth communication related to underwriting the loan and ensuring that the transaction stays on track. The best way to find a mortgage broker is through recommendations from family, friends, and your real estate agent.
A mortgage broker should not be confused with a mortgage banker, who closes and finances a mortgage with his own funds. The mortgage broker also collects the borrower's documentation and passes that documentation to a mortgage lender for insurance and approval purposes. Some lenders work exclusively with mortgage brokers, giving borrowers access to loans that would not otherwise be available to them. While it's true that you want great customer service during the application, underwriting, and closing process, don't choose your mortgage professional based on who you'll enjoy working with for the next 15 or 30 years.
On the contrary, as a mortgage consultant working with the power of a large broker behind me, I have access to every mortgage product available. Mortgage brokers, who may work within a mortgage brokerage firm or independently, deal with many lenders to find loans for their clients. The competitiveness and prices of homes in your market will influence the dictation of what mortgage brokers charge. As a licensed mortgage specialist in California, I have a fiduciary obligation to help you as best I can to get you a great rate.
Once you settle a loan and a lender that works best for you, your mortgage broker will work with the bank's insurance department, the closing agent (usually the title company), and your real estate agent to keep the transaction smooth until closing day. . .
