Whether you’re a first-time home buyer or are a seasoned veteran, you’ve got so many choices when it comes to purchasing a house. Finding the best mortgage company to structure a loan for your individual lending needs can be a challenge. Should you work with a mortgage lender? A mortgage broker? Or should you use an online service like Quicken Loans or Guaranteed Rate? In this article, we’ll discuss the difference between a mortgage lender and a mortgage broker—and hopefully help you make the homebuying decision that works best for you.
Shop around for home loans
It’s a great idea to compare multiple sources so you can find terms that fit in your financial situation and budget. Before you start looking for your dream house, take the time to learn about the many options you have as a home buyer.
If you’re shopping for a new home in California, you can calculate the home price you can pay and the mortgage schedule you will need based on the payment, down payment, taxes, and insurance you can afford. This calculation will provide an estimate of your house price range based on the monthly payment you can afford for a mortgage. Other factors include your credit rating and fees that you pay up front or roll into the mortgage loan.
Though real estate values do fluctuate, you will see a return on your investment. A home is likely the single largest investment you will make in your lifetime. It has enormous potential to build up your wealth over time.
So, starting with the best possible financing you can get seems like the best way to not only save money as you are getting started, but also to make an investment in your future. Why not work with a professional who can help you achieve these goals? The best mortgage companies in California can help. But who should you choose?
Working with a Mortgage Broker
You create your mortgage application and give it to your mortgage broker. A broker functions as an independent third party who can offer impartial advice. They often have access to a wider array of loan products than the average person.
The broker shops your application around to a variety of lending institutions to find the best overall deal for you—including price, terms, and more. The broker is your advocate in navigating the process—with your unique financial situation in mind.
There are some advantages to working with a mortgage broker:
- Your broker might work with 50 or more banks and are aware of the best terms they can offer.
- You only need to complete a mortgage application once. Your broker contacts the lenders on your behalf using the same application.
- You’ll have an advocate for the paperwork nightmare that is the mortgage process. Your broker helps you every step of the way with all the paperwork and other steps you need to go through to buy a house.
- A broker can help if your credit is less than perfect. If you have anything negative in your credit past, a broker can help borrowers with bankruptcy, foreclosure, or late payments that may have marred your credit.
Working with a mortgage broker has some disadvantages, as well:
- You’ll have to pay the broker. Depending on the loan specifics and the broker’s terms, you may have additional costs and fees. Whether or not those fees are worth it is up to you, so be sure to read everything and ask about any charges you don’t recognize or understand.
- Working with a broker could slow down your application process. Because the broker is shopping around, it can take time to find the best terms that work for you. If you’re in a hurry, this might not be the best solution for you.
Working with a Mortgage Lender
Depending on whether you’re comfortable doing the shopping around yourself, working directly with a bank, mortgage company, or credit union might be a better decision for you. You’ll get to be as hands-on as you want in finding the deal that works for you.
The benefits of working directly with a lender include:
- Qualifying for customer loyalty rates. The best mortgage companies in California have special programs you might qualify for, particularly if you work with your own bank or credit union.
- Using your own financial institution can help make the paperwork faster and easier since you’re already their customer.
And of course, finding your own lender has some drawbacks:
- You have to do all the shopping around. This can be overwhelming to those who are new to the process.
- You’ll need to complete a separate mortgage application every time. In other words, you’ll start from square one with each institution you’re interested in.
- You won’t have control over the loan officer you work with.
Golden State Mortgage Can Help
At Golden State Mortgage, we are a California-based mortgage company that can help you through every step of financing your new home. Fill out the quick contact form or call Golden State Mortgage today at 1-888-502-2136 to speak with one of our California mortgage specialists and get a free good faith estimate.