A lender is a financial institution that makes loans directly to you, such as a major bank. A mortgage lender is represented by a loan officer who typically speaks only for that particular bank's product line.
In contrast, a mortgage broker is an independent professional who can shop around to find the best deal among a variety of lenders. Mortgage brokers do not lend money.
The important question is: What does this mean for the individual seeking a loan? A borrower may wonder if there is a difference in cost to use a lender as compared to a mortgage broker, and if there are any advantages in using one over the other.
Cost is typically about the same and most consumer advisory blogs encourage shopping for the best deal by comparing a mortgage broker with a lender. The major concerns to the borrower are loan fees and interest rates. When dealing with a lender, the loan officer is typically an employee of the bank and has a nice office, in a higher rent building, a salary, insurance, and a pension plan, etc. for which their employer must factor in to the price of loan fees or interest rates in order to cover those expenses and make a desired profit. A mortgage broker typically gets compensated in the form of a commission, and it is possible that the cost of their commission is less than the fees charged by a direct lender if their costs are much less.
So another big question: Which one should a borrower choose? There are many happy borrowers who have used both banks and mortgage brokers. For people with really good credit, there is probably very little difference. If a borrower has less than stellar credit, then a mortgage broker may be the better route because they have the flexibility to shop different lenders to find the best rate and to line them up with a lender more likely to qualify them.
There really is no clear answer, but comparison shopping for the best deal based on rates and fees is a good bet.
1210 NE Dempsey Dr., Bend, OR 97702
3 beds, 1 bath, 1,092 square feet, .17 acre lot
Built in 1963
Listed by Coldwell Banker Morris Real Estate
61266 Sunflower Ln., Bend, OR 97702
4 beds, 3.5 baths, 2,220 square feet, .17 acre lot
Built in 2001
Listed by Keller Williams Realty Central Oregon
3323 NW Morningwood Ct., Bend, OR 97703
4 beds, 4.5 baths, 4,756 square feet, .30 acre lot
Built in 2007
Listed by Cascade Sotheby's International Realty