Summary: A quick explanation of the differences between an Austin mortgage broker and a mortgage lender, and which one to choose for your home buying needs.

There’s no doubt about it. Buying a new home in Austin can be an exciting process. For some people, it can downright nervewracking as well. This can be especially true of the mortgage process, which tends to overwhelm a lot of first-time home buyers.

A common point of confusion has to do with the difference between an Austin mortgage lender and a mortgage broker. So let’s take a closer look at these two players in the real estate scene:

Difference Between Primary Lenders and Mortgage Brokers

When you sit down with a mortgage professional to find out about their lending options, you will want to know whether the person represents the lending institution directly (a primary lender) or represents multiple lending institutions (a mortgage broker).

Essentially, this is the primary difference between an Austin mortgage lender and mortgage broker:

The primary lender will normally represent a single lending institution. Hence the word “primary.” On the contrary, a mortgage broker can represent several lending institutions at the same time.

A primary mortgage lender can only offer mortgage programs from the particular bank / lending institution they represent. But a mortgage brokers can offer programs from multiple lenders, which means more options for you.

Understanding Mortgage Broker Fees

Austin mortgage brokers charge fees for their services. After all, they are in a business trying to make money, just like any other profession. So as a home buyer, you should find out what these fees amount to, and who pays them.

It’s important to find this out up front, especially when you consider that broker fees are typically expressed as points, and that each point equals one percent of the loan amount. That can add up to a significant chunk of money for the average home buyer. So before you make a decision on using a mortgage broker, find out who pays the fees.

In many cases the broker’s fees are paid directly by the Austin lending institution that the broker “hands” the deal to. When this is the case, the home buyer does not have to pay the fees, which is obviously significant to the buyer. In other cases, however, the home buyer will have to pay the mortgage broker’s fees.

Choosing Your Mortgage Professional

Regardless of whether you work with an Austin mortgage lender or a broker, be sure you feel comfortable with the person and confident in their abilities to help you. You should also feel free to ask questions about your mortgage loan options.

Brokers also rely on mortgage loan leads to run their business.