What's The Difference?

As you begin the process of shopping for a home loan, you will find that you can buy a mortgage from one of several types of providers. You can get a loan from a mortgage lender, a mortgage broker, a neighborhood bank, a local credit union, or a savings & loan.   The biggest difference between them is in their relation to the money you are borrowing; they are either lending it to you directly or they are connecting you to a lender that will.

A mortgage lender, a bank, a credit union, and a savings and loan, in most cases, lend you the money directly and afterward realize a profit by selling the loan on the secondary market for a premium.  In some instances they remain in possession (they service) the loan and make their money from the interest you pay on the loan. A mortgage Broker, on the other hand, does not lend at all but acts as a go-between for a lender and a borrower.  They are independent contractors who offer many products from many different lenders. 

Ultimately, the only difference in your borrowing experience between a good broker and a good lender or bank is that the broker will be able to offer you more lender and product options.

So which is best for you?  It is impossible to say without doing your own investigating.  Each has its own strengths and weaknesses, and in most instances, shopping all three is wise as there is no rule as to which offers a better deal than the others.  Refer the following sections for more detailed escriptions of each. 

Lender  |  Broker  |  Bank