Is a Mortgage Broker a Credit Broker?

If you are not proficient in terms involving the credit market, you have probably heard about credit brokers and mortgage brokers, but you don’t know what they mean. But is a mortgage broker a credit broker, and are these two terms interchangeable?

Is a mortgage broker a credit broker? The answer is yes. Both mortgage brokers and loan brokers are credit brokers. A credit broker is an individual or a company specializing in the brokerage of credits for consumers. They are the middleman between individuals looking for consumer credit and a lending institution.

A broker showing a loan offer to clients

The help of credit brokers may be invaluable to you, especially if you are shopping for a loan or a mortgage for the first time. The credit market may seem confusing, and good brokers will compare different offers and steer you in the right direction.

Is a Mortgage Broker a Credit Broker?

There comes the point in your life when you require a payday loan. Or perhaps you are a student that can get a mortgage now that you have sufficient funds for a down payment. Once you venture into the credit industry, you will soon realize that it is full of companies and individuals specialized in helping people get the right financing. Credit brokers include mortgage brokers and loan brokers.

While any type of brokerage may seem like an unnecessary step toward getting financed (especially if you throw mortgage packagers in the mix,) dealing with the right ones will help you overcome many potential obstacles. Reliable and authorized brokers will work to bring together potential buyers (borrowers) and the lending companies. They are the intermediary that will overcome the hassle of shopping around for the right deal.

What Is a Credit Broker and What Services Do They Offer?

You may have come across a brokerage company in your search for the right loan or mortgage. If you are not well acquainted with the lending market, you may have thought that you were in contact with a direct lender. However, credit brokers are the middlemen of the credit industry. Their services can help you find the right credit for you and work in your interest to ensure you’ve reached the correct lender.

Are the Brokers Authorized?

Hiring a middleman can relieve you of the unnecessary hard work of searching for the right lender. However, before you hire any credit broker that catches your eye, be sure they’re legitimate and authorized. So, how to check this and be sure? The NMLS (National Mortgage Licensing System and Registry) keeps track of licensed brokers. Additionally, you can normally verify with the state regulator to see if a broker is registered or if an act of disciplinary measures has been issued against the broker.

Two men talking

Brokers vs. Direct Lender – What’s the Difference?

If you are new to the credit market, you may not realize that there’s a difference between brokers and direct lenders. The lender or a direct lending company is a financial institution or a private company that gives the loan. The best examples of this are banks. There are many direct lenders who operate online, and you won’t have the need to visit them in person. Some examples for people looking to get a mortgage for a home include AMCAP Purchase Mortgage, but also less known E Mortgage Capital. These are all private companies that specialize in providing home loans to the general public.

Let’s Compare the Differences Between Brokers, Real Estate Agents, and Direct Lenders

When it comes to the home buying process, it’s important to know who is who and what are their main responsibilities. You can see a comparison of the primary and most important obligations of a mortgage broker, a realtor, and the direct lender in the table below.

Mortgage brokerReal estate agentDirect lender
They work on gathering financial information from a borrowerThey will look and know all the current trends on the property marketThese are financial institutions that will check your financial information
They will prepare your mortgage applicationGiving valuable advice when it comes to property prices is one of the main characteristics of realtorsIt’s their decision whether you qualify or not
They will shop around to find the best lenders for your loanThey will negotiate the price for an asset you’re interested inThey can provide you with a pre-approval letter that can help you be more competitive in the property market
They are available to you to explain the mortgage processDealing with all the paperwork regarding asset purchases is one of the best benefits when working with realtorsOnce you are approved, they are the once that will finance your home purchase

The Greatest Benefits of Working With a Broker     

If you look at mortgage brokers, you will realize they are the much needed link between several instances involved in the home loan process. They connect a borrower and the lending company, but they also work with the realtor. Here are some of the pros of hiring a reliable and experienced mortgage broker:

  • They can help you save on fees. There are many costs associated with applying and getting approved, like origination fees, application and appraisal fees, and many more. A broker that has good ties with lenders may be able to waive some of these costs.
  • They can help you save money on a loan. As the more experienced brokers have access to a wider range of loans, they can easily sort out and pick the offers that will be most suitable for your situation.
  • As they have instant access to all the offers on the mortgage market, brokers will save you on time. You will be able to avoid shopping around for the most affordable rates and fees, and they will also negotiate in your name.
  • If you are in a tricky situation, the broker might be just what you need. If the asset you want to purchase is out of the ordinary or your credit score is not spotless, brokers can easily find a suitable lender with more flexible rules for giving out loans.

Should I Work With a Broker?

No matter whether you’re an experienced individual when it comes to finding good credit deals or you’re getting a loan for the first time, a trustworthy broker might be a perfect solution. Perhaps you are worried about your low credit score and bad credit history. Maybe your rent was considered debt because of irregular payments. Or you’re maybe eyeing a certain property attached with some issues? Brokers can work with you and help you overcome these obstacles.