Differentiating Lenders from Brokers

You can have home loans from several types of lenders, which include thrift institutions, commercial banks, mortgage companies, and credit unions. Different lenders will provide you quote with different prices, so you might want to contact several mortgage lenders before coming up with your decision to get the best price.

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You can also get a broker to arrange the transactions for you since they have access to several lenders, which means a wider selection of loan products and terms to choose from. Whether you get the services of a broker or go direct to a lender, it is best to know whether the financial institution you are eyeing operate as brokers or lenders, as some companies operate as both.

Moreover, brokers do not use the word “broker” in their advertisements. Knowing the difference can be very helpful, since brokers are usually paid a fee for their services and these may be separate from the lender’s fee. The broker’s compensation may be earned as points paid at closing or as add-on to your interest rate.

When negotiating with a broker, it is best to ask how they will be compensated, so that you can compare the different fees. When looking for a home mortgage lender, you must be prepared to negotiate not only with the lenders, but with brokers as well.

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