Are you looking for lender or broker services on your mortgage in Arizona? Are you still unsure if a lender or a broker would help you with your funding needs? Choosing can be challenging as your requirements will play a role in your decision. To guide you, just keep reading.
The Difference Between Lenders and Brokers
Direct mortgage lenders consist of banks and lending institutions. As the name implies, they offer to fund directly to clients. Mortgage brokers, meanwhile, are the middlemen between borrowers and lenders. They are licensed professionals who independently work for lenders to bring their products to clients.
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A mortgage lender is the one that approves loan applications made by borrowers. When a borrower directly applies to them, they are a direct lender. If brokers work for them, they seek the services of brokers to facilitate the loan applications.
As such, the broker only arranges loan applications for banks and other lenders. They are not tasked to set lending rules and standards. They are technically “introducing brokers” (i.e. introducing a client to a lender), getting paid by the lender in return.
The Pros and Cons
A mortgage lender can take advantage of existing banking relationships with clients via their checking or savings accounts to obtain a better deal. They have a quicker turnaround time in the loan approvals since they have complete control of the whole process. They also know who would help you out with your applications.
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A clear disadvantage of lenders is that they only have a limited number of products, i.e. their products. A client may also not get the lowest rates. Requirements are also less flexible and they normally charge fees for processing, among others.
A mortgage broker beats out lenders by offering competitive rates from many lenders. They can provide clients with more choices depending on their income or their credit profile. More so, they manage the loan process for you.
Brokers, however, have little to no control over the decisions made by lenders. They are just like sales staff. Also, they charge broker fees for doing your job to find a lender. Lastly, your interests and goals may not jive with theirs as they work for a commission.
Simplest, Quickest and More Reliable
Differences in need can decide which way a borrower will go. If your a newbie, or concerned about getting the best rates, and even if you are not affected by any time constraints, a broker is a good option. But if you are in dire need of funds or can go through the challenge of meeting stringent requirements, a lender is a better choice.
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But one thing that a lender can do better is to simplify the whole process. The quickest way to get a mortgage is to head to your bank (or a direct lender) and talk with a loan officer. There is no need to wait for rate comparisons and analysis of different products as a broker would do. It is even faster if you are already a customer of the bank, as you can possibly get the best deal you can find. That makes lenders more reliable.
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Mortgage lenders build their relationship with borrowers over trust and loyalty. They want to make sure that you will get the best of the loan while getting assured that you will repay them on time. It is a simple requirement. It not only helps your financing needs, but it also educates you to be responsible for your credit history and opportunities as well.