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Mortgage Broker VS Lender: Which Should A First-Time Homebuyer Choose?

The average mortgage in America just hit a new high. US consumers are seeking more than $350,000 to buy a new home or refinance one.

For first-time homebuyers, taking on a loan of that size can be a bit intimidating. Even if the mortgage you plan to get is smaller, you want to be sure you’re working with the right partner.

To that end, you have plenty of questions about choosing a mortgage broker VS lender. Picking the right partner can simplify the mortgage process. Be sure you know the differences.

Mortgage Broker VS Lender: What’s the Difference?

What are the differences between direct lenders and independent mortgage brokers?

A direct lender does exactly what the title implies. They lend you the money for your mortgage directly. There are no intermediaries.

By contrast, an independent mortgage broker acts as a go-between for you and the lender. The broker shops around and gets quotes from several different direct lenders.

Advantages of Working with Brokers

Working with a mortgage broker vs direct lender has a few advantages. First, the broker often has a wide network of lenders they can ask for an offer. They may even be able to speak to lenders who don’t work with individual homebuyers.

Next, the broker may be able to find you a more optimal rate. Since the broker has many client accounts, lenders may offer a lower rate than they would to an individual homebuyer.

Finally, the broker makes applying for mortgages easier. They’ll apply to several lenders at the same time, then present you with all the offers.

Advantages of Working with Direct Lenders

Not everyone chooses to work with a mortgage broker. Plenty of home buyers go to the source instead.

Some direct lenders may be willing to give you more favorable rates if you’ve done business with them in the past. For example, a bank you have an account with may approve you for a higher amount or a lower interest rate.

The biggest advantage of working with direct lenders is simplicity. Since you’re working directly with the lender, questions can be answered sooner. Paperwork may also be streamlined since you’re handing it to the lender.

Which is Better?

First-time homebuyers do well to compare all their mortgage options. As you start searching for a mortgage, you might want to talk to both direct lenders and mortgage brokers. Then you can decide mortgage banker vs mortgage broker.

Working with the lender is sometimes your better option. The process will be more transparent and streamlined. A broker may have conflicts of interest due to commissions, or you may end up paying more fees.

If a bank has turned you down, you’re not out of options. Searching a phrase like “mortgage lender near me” can help you find more local direct lenders.

Be Prepared for Your First Home Purchase

Now you know the difference between broker VS lender, which is an important step to financing your first home.

There’s so much more to know as you dip your toe into the world of real estate. Check out more insightful articles to learn about realtor fees, finding a builder, and more.


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About the Author

Kaya Wittenburg

Blog Author and CEO

Kaya Wittenburg is the Founder and CEO of Sky Five Properties. Since the age of 10, real estate has been deeply ingrained into his thoughts. With world-class negotiation and deal-making skills, he brings a highly impactful presence into every transaction that he touches.

He is here to help you use real estate as a vehicle to develop your own personal empire and feel deeply satisfied along the way. If you have an interest in buying, selling or renting property in South Florida, contact Kaya today.

Feel free to call me at: (305) 357-0635
or contact via email: