When planning to buy a new home or seeking to get a mortgage, you will find yourself in a sea of mortgage companies, bank brokers, and mortgage brokers. You may be wondering is if there is really any difference between one or the other?
Well, let’s start at the basic by defining each type of broker.
Mortgage and Bank Broker
The mortgage broker or a bank broker serves as a liaison between the homeowner and the mortgage company and the bank respectively. The broker helps you fill out all the documentation required by the lender, from the loan application to the financial documents, and has the authority to pre-approve your loan.
These brokers work with multiple lenders and banks at the same time and submit your applications for a loan to all of them. They get paid a commission for every completed loan application they bring to the lender.
How do Mortgage Companies or Banks work?
Banks and mortgage companies are the entities that are actually funding the loans. In the case of the bank, you are also in contact with the loan officer who is a direct employee. They only have access to the home loan programs set by the lender. Working directly with the lender instead of a broker helps to cut down on expenses, especially the broker’s fee.
There are a number of things to bear in mind when choosing one or the other. Surely, going with a mortgage broker seems like the best idea, you can save money, and you can enjoy all the benefits of having a broker well connected with multiple lenders. This is important to consider if you end up not being approved the first time you try. It just means you may have to try different ones before you will be approved.
As mentioned above, brokers are paid a commission from the lender, and for that reason, you have to be careful you are not being pushed towards a lender just because they will pay the broker more than others, regardless of not being the perfect fit for you.
Advantages of working with a mortgage broker
Choosing a broker, bank or mortgage has several advantages. The first one being the long list of lenders they work with, which the main reason that makes them such an attractive choice, especially to those with low credit scores or income related problems.
Here is a complete list of all the most important advantages of working with a broker:
- Access to a long list of lenders with some of the best rates and lowest fees.
- Perfect for borrowers with low credit scores.
- They have extensive knowledge in the mortgage loan field.
- Access to a long list of home or mortgage loan programs.
- Their reputation is easy to track online.