Mortgage Lender vs. Broker: What's the Difference?

The CPF Team
April 27, 2022

There is a fine line between the differences between a mortgage lender and a mortgage broker. Understanding the differences can be confusing to potential home buyers, which can make the process long and tedious if there is any confusion. Our goal here at CPF is to make the process of buying a home much more expedient and figuring out which is better suited for your needs will help smooth out the process and get you into your new home quicker.

What is a mortgage lender?

Let's start with the role of a mortgage lender. Let's say a borrower that walks into a mortgage lending company and applies for a loan. They're applying with that direct mortgage lender. That lender has a set of rates, guidelines, and requirements. Look at it as a box that that borrower has to fit into.

If a borrower wants multiple options, they're going to need to apply at several mortgage lenders. That can take time. And in today's world, it may not be realistic for a family with children to spend two, two-and-a-half, or even three hours on this application and devote that amount of time to trying to find the best mortgage loan for themselves.

If a borrower goes out and they apply at several direct mortgage lenders, they have options. They know they're getting the best rate at that point. Once you have all of your quotes, you have to review them. The government has done a great job of combining a lot of disclosures into one. The one that we look at the most is called "The Loan Estimate".

Although it's easier to read, you still have to understand how to read that as a borrower. How do you compare it to others? And that in itself can take time and effort in learning exactly how to read them, how to compare what is better, and determining what is not alright.

To recap, with a mortgage lender:

  • You apply directly with that mortgage lender
  • They have a set of rates, guidelines, and requirements
  • You apply with multiple lenders for options
  • You must learn how to interpret disclosures on your own

What is a mortgage broker?

Mortgage brokers and independent mortgage companies have the ability to work with multiple wholesale mortgage lenders. You go to one spot, make an application, and then that independent mortgage broker is going out and shopping with multiple mortgage lenders for you and negotiating terms. They're finding what is the best deal for you. They bring it back, and you have that mortgage broker to be able to review all of those offers and guide you on what is the best option for you and your family. It gives you options. It saves a lot of time and effort.

Mortgage brokers get wholesale mortgage rates. If a borrower walks into a mortgage lender and applies for a loan, that same borrower applies with a mortgage broker. That mortgage broker has the ability to work on a wholesale level with this mortgage lender that they applied with.

In many cases, that rate is actually going to be less with the mortgage broker because they're getting that rate wholesale. In order to gain a mortgage brokerage, businesses, mortgage lenders and wholesale mortgage companies have to provide that rate cheaper. So a lot of times when you go through a mortgage broker, you have options. It saves you time and you're going to be delivered a lower interest rate and better terms because you have several options to choose from.

To recap, with a mortgage broker:

  • They shop for multiple lenders for you
  • Guides you through the process
  • Provides options and saves time
  • Usually lowers wholesale rates

What are correspondent mortgage lenders?

This is another independent mortgage company type. They also have the ability to act very similarly to a mortgage broker and a mortgage lender. You're able to go as a correspondent mortgage lender and get quotes from multiple wholesale mortgage companies. The only difference is, at the closing table a correspondent mortgage lender has the ability to fund that loan with their own money. They then deliver it in what's called the secondary market to the wholesale lender of choice that they placed you with.

Give yourself options when searching for a home

In summary, options equal more control and an overall better deal for the consumer. Our speed and dedication to our consumers is our guarantee. If you are interested in finding the best home tailored to your needs, please Contact Us today! For any other questions, check out our Commonly Asked Mortgage Questions page! We look toward hearing from you!

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State of Florida, Colorado, Georgia and Tennessee.
NMLS #222883
Christopher Paul Financial, LLC dba CPF Mortgage is a Florida mortgage lender NMLS 222883, Florida state license MLD929, Colorado registered mortgage company NMLS 222883, licensed Tennessee mortgage lender NMLS 222883, and Georgia Residential Mortgage Licensee NMLS 222883. The main office is located at 10710 State Road 54, Ste. C101, Trinity, FL 34655. All loan approvals are credit driven, and all decisions are based on underwriting credit approvals. All rates, terms, and programs are subject to change without notice. Borrowers should consider their options carefully when choosing a loan program.
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