Banks or mortgage brokers is the home loan question, which should you choose? What is the difference? Which one will provide you with the best deal?
When our parents and grand parents had to get a home loan they were far more restricted on the options they had.
They would just head on down to their local bank, at which all of the employees probably knew them by name, and get a home loan.
Today, whether it’s better or not, we have a lot more choices. So banks or mortgage brokers is the home loan question and it is a reasonable question to ask.
In this article I will go over some of the differences between each type of mortgage loan process. I will also give you tips that will help streamline your home loan process no matter which type of lender you choose to go through.
Here is a little back ground on what a mortgage broker does:
1. They don’t work for just one bank. They have relationships with many different types of lenders. They are the « middlemen » in the loan process.
This enables them the broadest range of services for all their clients. Even if someone has some credit challenges a broker will usually be able to find someone who will be willing to work with that borrower.
Think of them like a big box store for mortgages. They have a lot more options of loans available and that will make it more likely to find the right type of loan for you.
2. A broker generally has a far broader range in their fee structure than a bank will have so you will most likely pay more for their services.
A broker can, and often does, charge a lot more in the way of fees and closing costs.
Sure, they may be more convenient with their one stop shopping approach, but that convenience will cost you.
Make sure you compare fees before you make your final decision so you don’t end up overpaying.
A bank is much more limited in the types of mortgages and the rates they can charge but if you don’t have any special circumstances or credit issues, you may be able to get the best deal.
Before you start searching for a mortgage do yourself a favor and take the time to clear up any credit issues you may have.
Even if you can’t get them all cleared up completely, making some changes and getting your financial house in order will help you in the end.
The better your credit score the lower your interest rate and the easier it will be for you to get a loan in the first place no matter who you are using to get financing.
Also, don’t get too carried away with the type of house you want to buy. Set your budget first and make sure you leave yourself some wiggle room for any unforeseen circumstances.
I hope this information will make the debate over banks or mortgage brokers is the home loan question a little easier to figure out. Each has their pros and cons and the right answer is really just about what works best for you.