Using A Mortgage Broker Vs A Bank

August 12, 2023

It’s easy to assume a person finds a home, gets a loan, and moves into their new home. However, this does not account for all the other little details such as deciding whether to use a bank or a broker, buying a house with a traditional or special mortgage, putting down twenty percent or more or less, and asking the seller for closing costs. There is so much fine print, so many details, and so much time that goes into buying a home, and finding a mortgage is just the first step. All buyers should get a preapproval letter from a bank before making any offers on any homes, but do they go with a mortgage broker or a bank when it’s time to find the mortgage of their dreams? It depends.Let's compare the options now.

Pros of A Mortgage Broker

A mortgage broker is someone who works with numerous banks and lenders to find buyers the best mortgage for their situation. The broker does not lend money to the buyer, but they work with dozens of lenders who do. The biggest benefit of working with a broker is the time buyers save. Rather than the buyer spending hours and weeks searching for the best rates, terms, and mortgage, the broker does this on the buyer's behalf. If a buyer is having trouble finding a mortgage with a traditional bank because of their credit score, their lack of a down payment, or any other reason, a broker can find the right lender for them a lot faster and without as much stress. Brokers work for the buyer, and they earn their fee.

Of course, there are some disadvantages to working with a mortgage broker. Keep reading to learn about them now.

Cons of A Mortgage Broker

Brokers are all different, and some might not have access to all the programs offered by specific banks, which could result in a buyer not being offered the right loan. A broker might also overcharge a buyer and cost them more than they would pay if they went through their own bank and secured their own mortgage. Finally, it’s always possible a buyer might not find the best broker to work with. If a buyer fails to do their homework, they could end up using a broker who isn’t familiar with the local market, is not competent, or is not able to get them the best rates, deals, and offers because they are all false advertising rather than about finding the right way to do business. Fortunately, finding the right broker is easier than buyers realize, and that’s all it takes to find more pros than cons in working with a broker.

It's time to move onto the pros of using a bank to secure a mortgage.

Pros For Using A Bank

Working with a bank to find the right loan for a home is easy, since buyers can walk right into their bank and apply for a mortgage with their longtime banker. The pros for using a bank are more prominent when the bank is one the buyer has a longtime relationship with, but using a bank can be beneficial to any buyer. There are many banks and credit unions with competitive rates willing to work with buyers to find the right mortgage. When a buyer works directly with the lender, they feel more control in the situation. The rates are often lower with a bank someone has an existing relationship with, and it’s easier to make automatic payments by linking existing accounts so buyers can bank with ease. Without a middleman like a broker, the process does feel faster for many buyers.

However, there are potential downsides to using a bank. Continue for details on this.

Cons For Using A Bank

Most banks offer a very conservative loan program that might not benefit a buyer who needs down payment assistance or an unconventional mortgage option. Additionally, banks tend to have very long mortgage loan application processes, and they are very strict. It could take months to finally secure a mortgage depending on the bank, the type of loan being used, and more. Banks tend to use a very long underwriting process, and they have their own list of personnel to work with. This includes appraisers and inspectors, and they might be backlogged in terms of doing their own job if the bank is issuing many mortgages at once. Additionally, if the banker a buyer works with has a baby, goes on vacation, or has an emergency, the entire process can be delayed. There are some certain cons associated with working with a bank, but they are nothing a buyer can’t handle if they're willing to work with someone they know and trust.

Continue to reveal how to efficiently choose between both options.

Choosing Between Them

As banks and brokers are both beneficial to buyers, choosing between them is personal. There is not a right answer or a wrong answer when a person is asking whether to use a bank or a broker. It depends on the type of loan a buyer is looking for, what they can afford, what their credit situation looks like, and the relationship the banker and buyer have with one another.

The simple truth is every buyer has a different experience working with a bank and a broker. Some have wonderful experiences with one or the other or both, and others struggle to find any positives in the entire situation. When choosing who to work with, buyers should consider the total cost. Which is more affordable, and would the buyer prefer to spend a little more money on a broker to save a lot more time finding the best loan? Perspective is important when looking for the right mortgage, and every buyer is different.

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