Real Estate Tips
Mortgage Brokers vs. Banks
You’re ready to apply for a mortgage but you’re wondering “mortgage broker or a bank”?
Here in today’s blog post, we’ll explore the difference between these two. Both have pros and cons, so you can decide for yourself which would suit you best.
Mortgage brokers make up for more than approximately 10% of home loan originations. Mortgage brokers help homeowners secure financing by working as middlemen between banks and mortgage lenders and the borrower.
Banks work directly with homeowners to provide financing on the retail level.
While deciding on which is best will be determined by your loan scenario and your individual needs, you can compare for lowest rates and fees.
Most homeowners get their lending from banks or large mortgage lenders because it’s often more convenient. Especially if your bank offers lending, it’s simply easy to grab an application while you’re there.
Often, when a person has trouble qualifying for a mortgage, bigger banks will likely turn you away. That’s when many people turn to a mortgage broker who typically have access to multitudes of loan products—from FHA loans, VA loans to jumbo loans and USDA loans. Whereas big banks may be limited to conventional mortgages backed by Freddie Mac and Fannie Mae.
Partnering up with a broker may help you navigate challenges along the way whether it’s about your credit history or down payment. They may even help you limit closing costs. When you go with a large financial institution, you may never speak to the same person more than once as each department may even be spread across the country or overseas. You’ll find many mortgage brokers are mom-and-pop shops, so you’ll often get someone on the phone when you call, rather than a recording or having to be passed around to a few different people until you’re connected with the right person.
When it comes to interest rates, broker rates can be cheaper but not always. Shop around and compare interest rates so you don’t pay too much on your loan.
All that said, your experience may vary based on who you choose to work with depending on your situation and the specific bank or broker you ultimately work with, so be sure to shop around and ask your friends and family who they recommend.
Ultimately, mortgage brokers may be the right option if you’re shopping for a loan, but you should always compare their rates and service to those at your local bank and credit union. When in doubt, have your real estate agent recommend a few for you to chose from…after all, they’ve dealt with many of them from both sides and can relay his or her experiences with you. We’d be happy to give you a few recommendations now, please call us at (888) 280-5704.