Although a mortgage broker and a mortgage banker can both help you get a mortgage loan when buying a home in the Nashville area, they are not the same thing.
So, what’s the difference between the two - and more importantlly, which one might be better choice for you?
According to the National Association of Mortgage Brokers, a broker is "an independent real estate financing professional who specializes in the origination of … mortgages." Where as, a mortgage banker, according to the Mortgage Bankers Association, is "an individual, firm or corporation that originates, sells and or services loans secured by mortgages."
Nashville area mortgage brokers are individuals or companies who unite borrowers and lenders together - and then facilitates the loan process between these two parties. When the contact results in a loan, the broker receives a commission - often from both parties.
A mortgage broker is an intermediary - typically hired by prospective borrowers who are not as familiar with the lending industry, don't have time to shop around for different types of loans, or both. The mortgage broker shops around for the best mortgage loan for the buyer - similar to the job of a Nashville real estate buyers agent, who works on behalf of the buyer to shop around for different homes specific to their needs.
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An experienced nashville area mortgage broker can evaluate different types of mortgage loans available as well as give offer insight as to which banks or financial institutions offer the most competitive rates and terms that are most compatible with the borrower's individual financial situation.
Nashville area home buyers who obtain a mortgage through a broker tend to get more specialized mortgages than the standard fifteen or thirty year mortgages that you hear about or read about on the web. When working with a broker, it's a good idea to get all the information about the mortgage loan types that area available to you in writing so that you can carefully review them and make an informed decision.
A Nashville area mortgage broker represents the borrower more than the lender. His/her responsibility is to get the borrower the best deal possible, regardless of the institution. A mortgage broker is generally paid by the loan - a commission of sorts - the difference between the rate he gets from the lending institution and the rate he provides to the borrower. Some brokers work on flat fees - a percentage of the value of the loan.
Generally, when you are buying a home in the Nashville area and enlist the services of a mortgage broker, you pay an initial fee or commission once you obtain your mortgage. However, their services and expertise will likely save you money in the long run, so don't let that deter you for working with one.
Nashville area mortgage bankers work in the loan department of a financial institution, a bank, savings and loan association or credit union. Mortgage bankers are lenders that are large enough to originate loans and create pools of loans, which are then sold directly to Fannie Mae, Freddie Mac, Ginnie Mae, jumbo loan investors, and others.
A Nashville area mortgage banker works with those planning on buying a home in the Nashville area to complete the mortgage process - from evaluating the property to gathering financial information and putting all the pieces together. A mortgage banker advises the borrower of the various loan options within that institution and can only make loans from that institution.
A mortgage banker is paid by the institution and his or her first responsibility is to the institution, to make sure loans are properly secured - and ensuring that the borrower is totally qualified and will make the loan payments.
Advantages of Working with a Broker
When buying a home in the Nashville area, there are many ways to approach your home financing process - beginning with the source that you choose to borrow from. And understanding the loan process can minimize frustration during the loan transaction.
The advantages of working with a broker are substantial and account for the shift away from banks and direct lenders. That being said, always work with an established Nashville area mortgage broker with integrity, and one that cares for the borrower throughout the experience!
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- Build a Plan of Action and Get Ready
- Finding the Right Seller
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