This week’s reader question is about who to approach when you’re looking for mortgage money. Here it is:

I am going through the mortgage process the second time. The first mortgage was for a very low amount, so I didn’t really learn much about the process. My question is what is the difference between using a mortgage broker and a bank to secure financing? What are the advantages and disadvantages of both? – John

Before we get to John’s answer, check out a video I did a couple of years ago about mortgage shopping.

Now let’s get to John’s answer, starting with what the term “broker” means and what they do.

What brokers do

Whether you’re talking real estate broker, stockbroker, insurance broker, mortgage broker or pawnbroker, they all have one thing in common: They’re middlemen who get paid to facilitate a transaction.

Logic would suggest that leaving out the middleman and dealing directly would allow for a less expensive transaction. But if brokers didn’t routinely save more than enough to offset their expense, they wouldn’t exist.

Stockbrokers have relationships with several exchanges, so they can get you the best price when you buy or sell stocks. Insurance brokers have relationships with multiple insurance companies, so they can get you the best price when you buy insurance.

http://finance.yahoo.com/news/ask-stacy-mortgage-broker-bank-150040816.html