Mortgage Lenders VS Mortgage Brokers- What the Difference is and How it Affects Your Loudoun County Townhouse Purchase

Mortgage Lenders

The loan officers at a Loudoun County bank, credit union or other lending institution are employees of that particular lending institution and work to sell and process mortgages and other loans originated by their employer. They often have a wide variety of loan types to draw from, but all loans originate from one and only one lending institution.

Your Loudoun County loan officer will take your application and seek out home loan that suits your financial needs within a loan program offered by the employer. If your personal credit is approved for the home loan, the loan officer moves forward to process your real estate purchase.

Mortgage Brokers

Mortgage brokers are professionals who are paid a fee to bring together lenders and borrowers. They usually work with dozens or even hundreds of lenders, not as an actual employee but as an independent contractor.

Think of mortgage brokers as the middleman for your Loudoun County home purchase. They locate and assess homebuyers, analyzing each individual’s credit situation to determine which lender has the best home loan program. The broker submits the homebuyer's application to one or more lenders in order to sell it, and works with the chosen lender until the home loan closes. A good mortgage broker can find a lender for just about any individual credit situation.

The mortgage broker working to secure your loan is earning a fee for the transaction and the better deal they achieve for a lender (which could be in the form of a higher rate, origination fees, or discount points), the more they are paid. Never disclose to a broker the interest rate you are willing to accept let them tell you what terms they can secure. Make sure you shop around to make sure the terms are reasonable. And remember to ask questions whenever they come up.

Most mortgage companies advertising online are mortgage brokers.

*******Important Note- be careful not to have multiple companies pull your credit score. Multiple inquiries can lead to your score dropping as much as 50 points!

What Difference Does it Make to My Loudoun County Townhouse Purchase?

A local or online mortgage broker may find you a lender in another part of the country. An online bank might not have a local office where employees can help you one-on-one.

Some out of town lenders don't understand the types of heating systems used in specific areas, they aren't familiar with private septic systems, and they don't immediately understand common classifications and terms used by local appraisers. Those are just a few examples of problems I've seen that caused significant slow-downs in loans made by an out of town lender working with a mortgage broker in Loudoun County. This can sometimes lead to a delayed settlement. Remember that if you are forced to delay your settlement because you are not ready to close, you are technically in default of your contract and could lose your earnest money deposit. This is entirely up to the seller at this point if they want to go through with the transaction or if they want to void the contract and keep your deposit. If you decide to use a lender from the west coast, there could be up to a 3 hour time difference, so don’t schedule a 9:00 am closing since it will be 6:00 am in California and no one will be in the office to assist you.

Using a local bank in Loudoun County can sometimes be a plus. Their staff generally understands the specifics of local properties, but a distant lender who doesn't will delay closing until questions are answered.

Mortgage brokers can often find a lender who will make loans that a bank refuses-problem credit is one example. Loans for unique or commercial properties might be easier to secure through a mortgage broker.

Make your choice of a lender based on the best loan terms you can find. Ask questions about expected time frame. For the names of qualified mortgage lenders and brokers that you can trust, send an e-mail to Finance@VirginiaIsForTownhomes.com. We will send you a list of trusted partners who will address your concerns and supply you with a free no obligation consultation.

Click here for your complimentary mortgage guides:

Borrowing Basics

Choosing the Right Mortgage