Throughout the home-buying process, you’ll be faced with many important decisions, and things can quickly become overwhelming and confusing. One decision that prospective homebuyers often get tripped up on is who they should work with. Should you go with an independent mortgage broker or work with a national lender? It can be difficult to determine which one will save you the most money and hassle, but there’s no need to worry. We’re here to help! In this article, we’ll take a look at the differences between independent mortgage brokers and national lenders and help you decide which one is best for you.
What is an Independent Mortgage Broker?
An independent mortgage broker is a licensed professional who works with multiple lenders to find you the best deal. They act as intermediaries between borrowers (you) and lenders at the start of the home buying process all the way through to closing. Although mortgage brokers help you acquire a mortgage, they do not provide the funds for the transaction.
Instead, they advocate on your behalf and help you work through any issues that arise on your journey to closing on your new , they’re rising in popularity among borrowers due to their flexibility and commitment to finding you the best possible rate.
What Is A National Firm?
A national mortgage firm is a moderate to large-sized business with multiple branches, many employees, and an extensive network. They typically have numerous in-house underwriters and a team of people ready to start processing your loan right away. National mortgage firms either provide direct loans or seek funding from one of several financial institutions that they work with. National lenders also tend to be exclusive. They only offer loans and products from institutions they work with, so if you’re looking for a loan from a competitor, you’ll have to work with another mortgage provider.
Mortgage Broker vs. National Firm/Lender: What are the Main Differences?
The main difference between mortgage brokers and national firms is that national mortgage firms offer loans directly. While brokers connect you to lenders, they don’t actually control the details of your loan. They’re essentially middlemen and work with multiple wholesale mortgage companies to bring you a wide array of loan options to consider. They also handle your paperwork and take care of the legwork, so you don’t have to.
Another difference between national firms and independent mortgage brokers is the size of the company. While independent mortgage brokers act as single point persons, national firms have everything that goes along with being a large company. They typically have online tools and may offer 24/7 customer service. Since they already have their team ready to go, national firms tend to provide faster, albeit less comprehensive, service.
Due to their commission fees, mortgage brokers tend to cost more upfront. Although the lender typically pays them once the borrower’s loan closes, sometimes the borrower is responsible for paying the commission upfront during their closing. However, national firms aren’t usually as dedicated to finding you the best deal, so the overall costs may even out.
Benefits of Mortgage Brokers Over National Firms
Although both national mortgage firms and independent mortgage brokers have their advantages and disadvantages, there are a few things that set mortgage brokers apart. Here are some benefits of choosing a mortgage broker instead of a national firm.
A Broker Can Save You Time
Because independent mortgage brokers advocate on your behalf, they can save you a substantial amount of time. Your broker will help you fill out paperwork, and they handle all of the communication with the lenders.
If you work with a national firm, you’ll likely have to crunch numbers and compare rates yourself, which takes a considerable amount of time and mental energy. Once you explain your needs to your broker, they’ll take over keeping track of the rates, terms, and conditions. They work hard to find a loan that fits your situation and gets you the most bang for your buck.
Mortgage Brokers Give Home-Buying A Personal Touch
Since mortgage brokers work with fewer clients at a time, you’ll feel more like an individual and less like a number in a queue. While national lenders tend to be cut and dry, independent mortgage brokers give you individualized attention. They’ll walk you through everything, including:
- Selecting your lender
- Filling out your Preapproval application
- Determining necessary documentation.
- Communicating with necessary parties for you.
Also, you’ll probably have an easier time reaching them if something comes up or you have a question. They’ll also be available to help you work through areas of difficulty, whereas a national firm may simply reject you outright. When you’re fiddling through tons of paperwork and educating yourself about home loan terms and processes, it is great to have someone there to help you through it all.
Mortgage Brokers Can Find You A Better Deal
Loan officers at a national firm only offer home loan products from the banks they work with. On the other hand, mortgage brokers often develop relationships with various lenders, giving you access to a broader network of potential lenders and broker-only deals. They can also help you secure a non-traditional type of loan or find one that matches your unique specifications.
The goal of any mortgage broker is to find you a low-interest loan substantial enough to finance your home. With a mortgage broker, you’ve got a good chance of saving some money with a stellar deal.
Mortgage Brokers Are More Flexible
A mortgage broker may be your best option if you have a checkered credit history, low credit score, or spotty employment. Since mortgage brokers work with so many types of lenders, they have a better chance of securing one that is willing to overlook circumstances that would usually result in dismissal from a national firm. If you wouldn’t qualify at most banks or national firms, the one-on-one advocacy offered by a mortgage broker can get you a much better deal than you’d find elsewhere. You also won’t have as many negative marks on your credit report from repeated credit checks.
They Understand Your Local Market
A local, independent mortgage broker is much more likely to understand the needs of your local market. They have a familiarity that is lacking with national firms. From the local economy to businesses and school districts, your mortgage broker can better understand which facets of the home buying process need more attention. They’ll also have relationships with your local appraisers, real estate agents, title companies, and support services if you need help finding additional assistance.
Some independent mortgage brokers can even help with post-acquisition services, like landscapers, general contractors, interior designers, and plumbers. When you visit a national firm, they won’t have such an intimate knowledge of your area and may even be from out of state if you work with them online. Although it’s easy to overlook, working with someone local can make a difference in the overall quality and personalization of their service.
While there are benefits to both independent mortgage brokers and national firms, mortgage brokers provide prospective homebuyers a personal, tailored service that meets their individual needs. They are hands down the better option for anyone who has heightened needs due to poor credit, minimal assets, or unstable employment. We hope this article has helped explain the differences between independent mortgage brokers and national firms. Regardless of which option you ultimately decide to go with, we wish you the best on your home-purchasing journey!