Mortgage Brokers vs. Banks, which is better?
Here are some reasons why each of the loaning services is preferred by borrowers.
After reading through the article, you will be able to find out which is better between the mortgage brokers vs. banks, and their pros and cons.
Is it better to go through Mortgage Brokers vs. Banks? Let’s dive right in.
Mortgage Brokers vs. Banks: What Is The Difference Between A Mortgage Broker And A Bank?
A mortgage broker links borrowers to the right lenders. They serve as professionals by cutting down the hassle of getting a mortgage.
Banks are direct lenders just like online lenders and specialty lenders who provide home buyers with mortgage loans.
Working with a bank to get a home loan is just like doing the work of finding out which bank would be best for you.
A mortgage broker, on the other hand, makes a list of banks that may be suitable for your loan and keeps track of their rates and fees in line with your considerations.
Mortgage Brokers Vs. Banks Pros And Cons
- Who pays who?
A bank is a single lending institution while a mortgage broker is an intermediary that works with a variety of lenders.
As a lending institution, banks are paid by the company. A mortgage broker’s salary comes from the commission he earns from a borrower’s mortgage.
Who pays the mortgage broker? Certainly, the borrower.
- Mortgage application process
The application processes of a mortgage broker and a bank is not the same. A bank can refuse to give you a mortgage if your credit score is low.
Going to banks to get a mortgage can be very strenuous, but with a mortgage broker, you can get updates on the progress of your mortgage right from the comfort of your home.
- Cost of mortgage loans
Mortgage brokers cost extra money. When hiring a mortgage broker, bear in mind that you would pay lender fees asides from the loan amounts and other additional costs of the mortgage.
Mortgage bankers offer their services free of charge since you would be getting the mortgage directly from their lending services.
The reason why brokers cost more than banks is that they would go through the stress of getting you the most convenient mortgage and the best mortgage lenders
- Choice Of Mortgage
Mortgage brokers can get you a bigger mortgage and one that is suited to your taste. Banks can only offer you mortgages that are up to your credit score and with their specifications.
Though you would be in better control of your mortgage by working with a bank, your mortgage choices can be quite limited.
A mortgage broker can offer you a wider range of options and streamline the mortgage process.
A mortgage broker as an intermediary helps borrowers identify the best lenders and mortgage options while a bank decides first if you qualify for a loan, then hands you a check if you do.
When comparing mortgage offers, your current financial situation and preferences would determine which would be better between a mortgage broker and a bank.
To get a home loan from a bank, you need to be knowledgeable of terms in the financial industry, to avoid getting winded up in mortgage jargon.
Also if you want to feel more in control of the home buying process, then direct lenders such as mortgage banks would be your choicest option.
If this is you, but you do not qualify for a mortgage, then you can go for a mortgage broker.
Besides, it would make more sense to contact one if banks and financial institutions give you a hard time finding a high-value loan.
Pros of Working With A Mortgage Broker
1. One of the advantages of using mortgage brokers vs. banks is that you have access to more resources, customized assistance, and support in making informed decisions.
2. Brokers help you with how to get a mortgage. They help gather the documents necessary for your loaning processes. They also give you all the information you will need to apply for a mortgage.
3. Another one of the benefits of working with a broker is that you are exposed to more loaning opportunities. A mortgage broker can offer you lots of mortgage opportunities since they are not aligned with only one lender.
A mortgage broker gives you access to various loans, while a loan officer only gives you the offers that are currently present on the home loan products of the bank.
Mortgage brokers are best at getting you a shortcut to obtain any home loan with the relevant lenders.
4. Mortgage brokers are convenient because they save you time in finding the right bank for you
5. The mortgage broker handles the stress involved in getting a mortgage. They do the actual application and loan closing process.
Pros of Using A Bank
1. If you want to work directly on your loan services, then you would consider working with a bank employee. When working directly with your bank, you can address technical issues easily.
2. The advantage of using banks over mortgage brokers is that you can get favorable discounts on your loan amount.
Though brokers can find the best mortgage rates for you, but also banks can give you discount options to shop from. Your discount can go as far as giving you zero origination fees.
This is even better when you are an already existing customer of the bank, such as if you have a savings account in the bank or they are your credit card company.
3. Lesser fees and fewer additional costs. Mortgage brokers earn as much as 1 – 2% of your total loan amount. By working directly with a bank, you wouldn’t have to pay these fees.
We have come to the end of this article, and to draw a line to our original argument, this is what we think is best; mortgage brokers vs. banks.
If you have the money, mortgage brokers would try to rip you off of the cast with their outrageous fees. But still, they would get you what you want.
Alternatively, banks would get you the mortgage that you can afford by comparing your credit score with the loan value, however, what you can afford at the moment may not be the kind of mortgage offer you want to take.
So if you are the kind of person that would choose preference and comfortability over cost, then brokers are your best pick.
Then, if you want to save costs but can handle the mortgage activities on your own, banks that offer mortgages are the best option for you.
I know you may think I’m just straddling my options, but I guess we are different beings and I can’t easily conclude on the kind of offers you would like best.
How about you, drop a comment in the comments section below. Which would you would go for a Mortgage Brokers vs. Banks. Don’t forget to tell us why you think any of them is the best option.