When you're ready to buy a home, do you know who to turn to for your home loan? Do you know the difference between a mortgage banker and a mortgage broker? The main difference between the two types of lenders, such as: 1) Mortgage broker: originate loans with the intention of selling them to wholesale lending institutions; 2) Mortgage Banker: They are lenders who are big enough to originate loans plus loan packages that they then sell to one of the three big lending institutions: Fannie Mae, Ginnie Mae or Freddie Mac, and also giant loan investors. The mortgage broker does not underwrite or finance the loans, these steps are performed by the wholesale lender, the three previous big investors and the big investors. Typically, the broker has a relationship with one of the large institutions and they use them to finance most of their mortgage loans. One of the advantages of using a mortgage broker is that they can choose the right lender for a borrower in an unusual situation because they know the hot spots of various wholesale lenders. The most important advantage is that if your loan is rejected for some reason, the broker only has to repackage your loan with another set of loans and present it to a different wholesale lender.
Mortgage brokers are used by wholesale lenders as their loan officers. The broker gets a lower rate from the lender and then the broker will add its rate to that rate. This generally resembles what you would have received if you had gone straight to a mortgage broker unless the lender has added high compensation for himself. An advantage of using a mortgage broker is that some of the most qualified loan officers in the business work for mortgage brokers. But this is not always the case because mortgage brokers also tend to hire new brokers who gain their experience working for the mortgage broker company.
Therefore, there is always a chance that you could get a new broker when entering the business. This could cause you some difficulty if there is something troublesome about your property or your financial situation and the new guy has not encountered that situation before. Where an experienced mortgage broker would probably know exactly what to do in most situations, an inexperienced one may not know. You must be very careful when choosing your broker and try to get an experienced one. Another thing to watch out for is the greedy loan officer, and there are unscrupulous characters in the mortgage business just like anywhere else. They may try to impose a fee by charging you a much higher fee for their services than an honest loan officer. It is very important that you compare prices and be sure to ask about the rates and costs of the services provided.
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