When you prepare to get your mortgage, you are going to have to learn a lot of new terminology. One of the confusing aspects of getting a mortgage is choosing the person or entity you are going to borrow from. A mortgage broker is not the same thing as a lender, so you need to learn the difference between these basic terms.

You may or may not want to use a mortgage broker to get your mortgage. A broker is an individual who works to find lenders for borrowers and make the connections. In return for their service, they are paid a commission from the lender. Typically, mortgage brokers work with numerous lenders.

A lender, on the other hand, is not an individual. It is a financial institution that gives money to consumers for purchasing homes. A mortgage bank is one type of lender, but credit unions, stock brokerages, and savings companies can all choose to be mortgage lenders. In fact, any company who has the money available to lend and has complied with the state and federal legislation regarding mortgage lending can become a mortgage lender.

If you choose to borrow directly from the lender, you will still work with an individual, called loan officer. This is the person who will handle the transaction, take your information, help you close on the house, and help you set up your payment structure.

So, is there any benefit to working with a mortgage broker? Actually, yes there is. They typically have many banks and lenders they work with, which means that you will likely end up with a better loan. They will do all of the legwork for you, securing the best loan with the best rate for your situation. You could end up with a loan from an out-of-state lender that is actually the best possible loan for you. They also can sometimes find loans for those who are in difficult credit situations. These are borrowers who are almost always turned away by a bank's loan officer.

On the other hand, sometimes using an out-of-state lender can bring problems for the borrower. The lender may not know the specific laws in your area, such as required appraisals and inspections. This type of misunderstanding can make the loan process slow down significantly.

So if you need a mortgage, take some time to communicate with both brokers and loan officers. You will find the best possible mortgage in this way, whether it be with a traditional lender or a mortgage broker. Just make sure that you understand everything before you sign for a mortgage, and you will have a loan that is the right fit.