Understand your options for home loans

You’re ready to buy a new house. You’ve worked on your credit score and looked at your budget to figure out how much you can spend. Now you’re looking for a lender.

There are different kinds of mortgage lenders you can use when searching for home loans , and they each have pros and cons. This cheat sheet can help you figure out which kind of lender is best for you.

Mortgage banks

As a direct lender, the mortgage bank makes the decision to lend you money. This can make the loan process smoother — you’ve gone straight to the source of the loan. Also, mortgage banks are regulated by state and federal agencies, so they may be more reliable than other types of lenders.

On the other hand, if you wanted to compare rates, you would have to speak to a different bank or even several banks, which could be time-consuming.

Mortgage brokers

A mortgage broker serves as a middleman between you and your lender. He or she may have access to home loans from hundreds of lenders. For this reason, you will save time on comparison shopping and have access to a greater variety of loan products.

But be warned: Mortgage brokers may not be subject to the same degree of regulation and scrutiny as mortgage banks, and sometimes brokers try to boost their earnings by putting hidden costs in your loan. But, if you understand the loan process and ask lots of questions, you may be able to avoid these fees.

Internet lenders

For armchair loan shopping, try checking out Internet mortgage lenders. Some Internet lenders operate on the Web only, while others are online extensions of brick-and-mortar banks or brokerages. Using an Internet lender can make the loan process faster and easier, but if you prefer a more personal experience when comparing rates on home loans it might not be for you.