One of the most common mistakes that a buyer makes is mixing up mortgage lender, mortgage brokers, and a traditional bank. So, this blog post is for those who still can’t distinguish one from the other.
Although It’s possible to get mortgage from all three, there is one major difference between them that a buyer should be aware of – PROCESS.
A mortgage lender is a company who makes its own decisions – that includes the processing, underwriting, funding and closing of a transaction. Its funds come directly from its own internal resource. The entire process is controlled by one single company. Hence, making things more speedy. It seems to be the most superior among the three, not to mention, flexible as it offers the most options and the most products.
A mortgage broker is a bit different. Their underwriting is done by another party, which means that they lend someone else’s money. On top of that, they don’t make their own decisions – the lender does. They forward applications to the other party (lender or the bank) who ultimately makes the decisions. From the application to the closing, the broker served as a middleman between the buyer and the actual lender. Although sometimes, the actual lender would be directly involved in the transaction with the buyers, more often than not, It’s the broker that chases down all the documents up to the end company.
A traditional bank like ATLANTIC UNION BANK, is a direct lender…a mortgage lender. It consists of a group of people who makes decisions for that bank. Like a mortgage lender, banks do not take a long time with their decisions because decisions are made within the bank. However, they may be a little conservative when it comes to lending. They may have a more stringent criteria compared to a mortgage lender’s because of certain traditional bank or federal rules and regulations that they are bound to. So, if something doesn’t fit exactly into their box, they will most likely reject it.