Buying a home can seem like a complex process. In addition to the challenges of finding your perfect home, finding the right financing can also be a challenge. There are two types of financial professionals you may run into as your shopping for a mortgage. You may encounter mortgage brokers and mortgage loan officers. Although these titles have the same, and some people use them interchangeably, they are actually two very different roles. Choosing the right financial professional can make a big difference in finding a mortgage that fits your financial situation.
What Is a Mortgage Broker?
A mortgage broker is an individual who represents multiple lenders. This gives them access to a wide range of products, and in a perfect world, this would make them totally neutral. The reality, though, is that they may receive rebates from loans with higher interest rates. This helps to pay the mortgage broker’s commission. This rebate is called a yield spread premium, or YSP.
Mortgage brokers may also be paid fees. The fees are paid by the borrower and are typically 1 percent of the loan amount. While that may not sound like much, for a $350,000 house, that comes to $3,500. That’s money that you could be spending on other expenses related to buying a home, such as your down payment, closing costs, and moving expenses.
Brokered mortgages can also take longer to process. If the lender is slow about processing your application, there isn’t much that a mortgage broker can do about it.
What Is a Mortgage Loan Officer?
A mortgage loan officer is a mortgage specialist who works for a specific financial institution such as a community bank. A loan officer is deeply familiar with the products they offer because they specialize in a smaller number of products offered by one institution. They handle your mortgage transaction from start to finish and have established relationships with the other departments that will be involved in your mortgage transaction. For example, if there’s an issue in underwriting your mortgage, a mortgage loan officer can quickly and easily reach out to an underwriter to find out what’s going on and help resolve the issue.
With a mortgage loan officer, you don’t pay any fees for their services. They have no financial incentive to offer you one type of mortgage over another. They will connect you with the product that’s the best fit for your financial situation.
Which One Should I Work With?
Mortgage brokers have access to a wide range of mortgages, but their services can be expensive, and they have no relationship with the lenders whose products they offer. By working with a mortgage loan officer at a community bank, you’re working directly with the lender instead of a middleman. Loan officers know the ins and outs of the application process, which products are the best fit for your financial situation, and how to get your mortgage processed as quickly as possible. You also don’t have to pay any additional fees to your loan officer. You don’t have to worry about a loan officer encouraging you to take one type of mortgage over another for their personal financial gain.
Mortgage loan officers also have an added incentive to keep you happy. After all, you may have other accounts at your community bank. They want to keep (or establish) a relationship with you on a long-term basis. They won’t just disappear once you get your house keys. A community bank like Arthur State Bank is invested in the local community and wants you to be a lifelong customer. You’re more than just another mortgage application. You’re a valued client.
Your Mortgage Partner
At Arthur State Bank, we take pride in serving our community with excellence. We’ve been serving South Carolina since 1933. We offer a wide range of mortgage products, including:
- First-time homebuyer mortgages
- Conventional, fixed-rate mortgages
- Adjustable rate mortgages
- Construction/permanent mortgages
- Home equity lines of credit
If you’re curious about what a mortgage with us might look like, we encourage you to try out our mortgage calculator. We also encourage you to connect with one of our local mortgage loan officers, who are happy to sit down with you and help you decide on the right mortgage product for your needs. For more information, contact us today.