If you’re in the process of shopping for a mortgage, you may be wondering what the difference is between a mortgage lender and a mortgage broker. Understanding the terms will help you know whom to approach for your mortgage needs and how they can help you. So, without further ado, let’s dive in and explore mortgage lender vs. broker!
What is a Mortgage Lender?
A mortgage lender is a financial institution that provides loans to individuals for the purchase of real estate. The loan is secured by the property itself, which means that if you default on the loan, the lender can foreclose on the house and sell it to recoup their losses. Mortgage lenders can be banks, credit unions, or private companies wherein they use their own funds or money from investors to lend out. The benefit for mortgage lenders is that they tend to make a profit off of the interest paid on loans. Additionally, mortgage lenders typically have more lenient credit requirements than banks, which makes them a good option for those with less-than-perfect credit.
What is a Mortgage Broker?
A mortgage broker is an intermediate between borrowers and lenders. They work with multiple lenders to find loans for their clients, as well as provide guidance and support throughout the loan process. Mortgage brokers typically don’t lend their own money, but instead, they earn a commission from the lender for bringing them business.
The advantage of working with a mortgage broker is that they have access to many different lenders and can shop around for the best rates and terms on your behalf. All you have to do is find a reputable mortgage broker in Toronto to work with. This is because the mortgage industry is highly regulated, and only licensed mortgage professionals can help you with your loan.
The Key Difference Between Mortgage Lender vs. Mortgage Broker
The key difference between a mortgage lender and a mortgage broker is that a mortgage lender is the actual financial institution that offers and funds the loan, while a mortgage broker is a mediator who works with multiple lenders to find the best loan for their client. If you’re still not sure which one is right for you, the best thing to do is to speak with a mortgage professional who can help you understand the process and find the best option for your needs.
The Bottom Line
Now that you know the difference between a mortgage lender and a mortgage broker, you can better understand the role each plays in the home-buying process. If you have any questions, be sure to ask a mortgage professional for more information. They will be able to help you find the best mortgage solution based on your individual needs and circumstances.