Applying for a mortgage can be an exciting and nerve-wracking experience. You’re one step closer…
The Truth About Mortgage Brokers vs Banks
You’re finally ready to buy a home. Congratulations!
Before you set off to find the perfect home in this competitive market, you first must to choose who will service your mortgage. Like some people, you may assume that a traditional bank is the way to go. You also may be confused about what a mortgage broker does and how they can help you.
In this blog, we’re sharing the difference between mortgage brokers vs banks with the information you need to get the best home loan.
Keep reading to discover key ways to save you money, time, and hassle.
Is it smart to go directly to a lender?
At first thought, you may think it’s wise to work directly with the institution financing your loan. This could be a bank or even an online lender.
Direct lenders will examine your income, credit scores, and other factors to determine your loan’s size and rate. They are lending the funds that finance your home.
There are a few advantages to working directly with a bank, such as shorter timelines since most of your application is processed in-house. As a result, lenders generally have more influence over how things go.
However, saving a few days on your mortgage may not be worth it in the long run, and here’s why:
- Banks may sell products that are more favorable to them
- Retail banks and direct online lenders offer less flexibility
- Direct lenders have an incentive to give you less affordable terms
- You may not get a full picture of what’s available to you
Most importantly, banks operate within a limited framework with fewer products. You could risk getting a one-size-fits-all mortgage that doesn’t serve your individual needs.
These are things to keep in mind as we move on to exploring whether a mortgage broker is right for you.
What does a mortgage broker do, anyway?
Unlike lenders, mortgage brokers don’t lend you the money for your loan. As their name suggests, they broker the terms between you and the entity lending you funds.
This is a key difference between mortgage brokers vs banks, not to mention a big advantage.
Mortgage brokers are in a position to search for the best loan that meets your individual needs. They also have established connections in all corners of the industry, so they’re able to hunt for the best mortgage.
Think of a mortgage brokerage as a search engine that’s able to find you the best rates, terms, and lender for your specific needs. The result is that you end up with a mortgage that works for you and not just the bank.
Mortgage brokers help you overcome credit issues
If you have less than perfect credit and hope to buy a home, we strongly recommend using a mortgage broker.
A direct lender may be less willing to take you on if you have a questionable credit history. You may be asked to reapply once your credit is repaired, or you could end up with a higher rate because you’re deemed as risky.
By contrast, most brokers will offer the following:
- Personalized guidance to repairing your credit
- Access to direct lenders and loan programs that will approve you
- Potentially lower rates, despite a patchy credit history
Clearing the credit hurdle for many borrowers should be an important factor when choosing between mortgage brokers vs banks. Also, brokers can help you price shop for better rates and more favorable terms that will ultimately improve your credit score.
You’re more than a number
At MBA, we understand that every home buyer is unique. That’s why we offer individualized guidance to those who trust us with life’s most important purchase.
Whether you’re a first-time home buyer or someone looking for ways to qualify for a mortgage, our talented loan officers are here to get you home on your terms.
Our website makes it easy to see what you qualify for and discover what steps you should take to get your dream home. We also offer buyers free resources, like our free downloadable buyers guide to springtime house-hunting.
Do you still have questions? Great! We’re here to help.
Contact us today to find a flexible mortgage that works for you.