Mortgage Brokers vs. The Bank
Which One is Right For You?
Should You Work With a Bank or a Mortgage Broker for Your Mortgage Loan? When you make the decision to apply for a mortgage loan, you must determine whether you want to work with a mortgage broker or apply for your loan directly with a bank. While both options can assist you with getting a new mortgage for your purchasing or refinancing needs, there are pros and cons associated with both that you should become familiar with. Upon closer review of what each option has to offer, you may decide that one option is better suited for you than the other.
Different Loan Programs One of the most significant differences that you will find between working with a mortgage broker and a bank is the variety of loan programs available to you. When you call a bank for a home mortgage, the loan representative who you speak with is an employee of the bank. He or she will attempt to find the best bank loan program that meets your needs. However, the loan programs offered by a single bank are not representative of all loan programs available to you. Banks often have strict lending guidelines that they must follow, and your specific lending needs may not fall within those guidelines and parameters.
Different Loan Programs cont’d A broker, on the other hand, is a lending professional who works as a consultant for you. He or she will assist you in finding the best loan program available. One aspect of a broker’s services involves shopping around to find loan program that will provide you with the lowest rate, lowest fees and best overall loan terms for your needs. Further, if your loan request has special considerations, such as if you are selfemployed or have a lower credit rating, the broker can use his extensive knowledge of loan programs available to help you most easily find a program that meets your needs.
The Costs Many people shy away from using the services of a broker because they believe the broker will tack on an extra fee to the closing costs. The fact is that a broker will charge a fee for his services, and this typically is a fee paid at closing that is in addition to other standard loan fees. However, it is important to note that a broker can save you money as well.
The Costs cont’d By helping you to shop around for the best loan possible, he can help you to find a loan with lower closing costs, a lower interest rate and ultimately a lower monthly payment in many cases. The best loan possible is not always available through the bank, and the broker’s services can help you to find the loan that is most affordable for you.
The End Result Whether you work with a broker or a bank to apply for your loan, the end result may appear to be the same. With both options, you may get approved for a new mortgage loan. However, many people find it advantageous to first get a quote from the bank they normally work with. This quote can be used as a benchmark, and you can then ask a broker to work on your behalf to shop for a better loan. Of course, you could spend your valuable time shopping around.
The End Result cont’d
However, the use of a broker can save you time in this effort. Further, because a broker has extensive knowledge of the loan programs offered by different lenders, you may find greater success in locating the best loan program when you use a broker’s services.
If you are like most people, you will decide to work with a broker and see which loan programs a broker can suggest to you. You can easily locate a broker to work with through an online search, and this can be a great first step toward finding the best loan possible for your upcoming purchase or refinance.