Mortgage Broker or Lender?

Some of the most common questions I get are about the differences between a mortgage lender and a mortgage broker. For the sake of convenience, I wrote this blog post which I hope will be a thorough explanation for future reference.

Mortgage Lender

The term "mortgage lender" could refer to an institution or an individual. If it is an individual, the person will sometimes call themselves a "loan officer" or "mortgage consultant" or something like that. Basically, this person works for a lending institution directly. Their job is to be the "face" of the lending institution like a commercial bank (e.g, Wells Fargo, Chase) or a smaller bank or credit union. If you come to them, they will offer you various loans available through their institution only.

Mortgage Broker

A mortgage broker, by contrast, is able to offer you a loan through several different institutions. They will gather information about you and then approach a few lenders to see what is available to someone with your credit profile, assets, and income. Often, these are individuals, but there are also mortgage brokerage websites like Lendingtree.com or Quickenloans.com. Mortgage brokers charge a fee for their service.

Which is better?

I can't answer this question for you; it is really up to you. It might make sense to approach a mortgage broker to see what they can offer you. It's entirely possible they can get you a better loan than you would find on your own, and this could be well worth the fee. If you're in a rush to buy your dream home, I would recommend talking to a lender directly since they will be able to qualify you and start the process more quickly, which could lead to less hassle down the road. 

One note: I do not recommend using an online or totally remote lender because the tax structure and municipal requirements in Allegheny County cause a lot of confusion for people who aren't used to dealing with it everyday. If you choose an online lender, that's fine, but be aware it may cause some frustration for you later on in the process. If they offer you amazingly better terms, that temporary frustration could be worth it. But, be aware that you are taking a risk. If they screw up and fail to close on time, you may lose the house or incur unexpected expenses.

Jay Villella