We’ve met a lot of fantastic lenders over the years. Truth is, there isn’t a clear-cut winner when deciding what type of lender to use. The key is to find someone as knowledgeable as a great financial advisor.
3 Options to Compare
Types of Loan Officers Every LO works in one of these capacities
A Mortgage Broker shops around for a mortgage on your behalf — and then helps you apply for the one that best fits your needs. Think of them as a middleman between you and all kinds of potential lenders (banks, credit unions, trust companies, etc).
A Mortgage Banker will offer you mortgages available through the particular lender where they work (say, Citibank or Bank of America).
A Correspondent Lender has enough money themselves to fund your mortgage. They will make the decision whether or not to finance your loan, but as soon as they do, they will immediately sell it off to a bank (or other financial institution). They “correspond” with a lender throughout the process to ensure they can re-sell your mortgage as soon as you agree to it.
Shorthand What to remember
Brokers are generally able to find more flexible loans, since they have a wider portfolio of options to choose from.
Bankers may have more consistent service, since they are larger, more stable institutions.
Correspondent Lenders tend to have faster turn-around times, since they approve and finance the loan themselves.
Popularity Percentage of buyers who choose this type
Traditional banks may have slightly higher interest rates, but you need to carefully review all the terms of a mortgage before you let that dissuade you. Just because interest rates are higher doesn’t mean a bank’s mortgage loan is more expensive overall.
Bank of America no longer works with Correspondent Lenders, because they claim buyers who obtain loans through the bank’s retail branches enjoy better service and a more seamless experience. Others, like Chase and Ally Bank, are curtailing their use.
Because they are technically paying for the loan themselves, if they resell your mortgage at a markup to another lender, they pocket those savings (and you’ll never know how much they earned off your mortgage).