1. What's the difference between a mortgage broker and a lender-and what's the advantage of using a broker?

A mortgage broker offers the loan products of different lenders, but doesn't lend the money. Where a lender makes the final decisions regarding loan approvals and provides the money to the borrowers at the closing table.

A Mortgage broker also offers the borrowers different proposals to choose from before making the final decisions on which particular program is going to best suit their financial goals and needs. In other words, brokers are the experts at shopping the market for the borrowers. Brokers also takes the loan applications, prices the loan, and locks the interest rates. The brokers will build a full complete file before submitting to the lender. Once approved the broker will then schedule a signing time to sign loan documents.

The lender is one that will fund the loan and make sure it gets recorded, then disburses all of the loan proceeds to the necessary parties.

2.How do mortgage brokers make money?

The lenders that mortgage brokers deal with quotes wholesale prices leaving it to the brokers to add a mark up. The wholesale price plus the mark up equals the retail price the broker quotes to the consumer.

3. Won't I pay less if I go directly to the broker?

You could pay less, or you could pay more, it all depends. The wholesale prices that lenders quote to the brokers are lower then the retail prices quote to borrowers because of the work that brokers do for them that lenders would have to do themselves.

4. What should I know about mortgage auction sites like Lendingtree.com?

Mortgage auction sites pull together a group of lenders who actually bids for your loan. Another so-called nane for this is "lead-generation sites" because from most lenders perspective that is what they do. A "lead" is a packet of information about a consumer in the market for loan. Therefore lenders pay for leads and auction sites that are of important sources to them.

5. Should you refinance with your current lender?

In a case of refinancing with your current lender, the one option that could possibly be beneficial to you (the borrower) is that the lender may have the position to waive some settlement costs because you are an existing customer. A lender may also offer a deal that is better then the one you currently have. If the lender knows your interested in refinancing they would want the new loan. Some lenders have what is called "retention" programs which is supposed to be designed to recapture as many as possible the borrowers who are determined to refinance, and try to offer you to lower settlement costs than a new lender but this can vary from case to case.