It might seem like a hard decision to choose between a mortgage broker or a bank, especially if you are looking for the best mortgage rates and best deal. Understanding the differences, advantages and disadvantages of both options will help to make your decision easy.
Understanding a Mortgage Broker
Think of a mortgage broker as a self-employed middleman who work mostly on a commission basis. They work with hundreds of lenders and are paid by lenders. They also work with you, the borrower and are paid their commission by the lender once you’ve secured your mortgage.
Mortgage brokers tend to enable borrowers to buy with ease, since they basically do all the leg work. They can ever be the middleman between you and the banks, if you wish. A mortgage broker will educate themselves on your particular situation, calculate your pre-approval to determine what you could be eligible for, send your application and discuss various rates with you to see which one works best for you. It’s no secret that mortgage brokers most often get the best rates, even for those with mediocre credit history.
Know the Banks
Although a loan officer may seem similar to a mortgage broker, keep in mind they work for the bank and work on commission or salary, plus commission. Even though they too can work with you to determine your needs when it comes to getting a mortgage and negotiate with you on fixed rates, but it’s probably the posted rate.
Which One Should You Choose?
So here’s the big question, which one should you go with? Well let’s compare the advantages and disadvantage of each one.
Advantages of Choosing a Mortgage Broker:
- They work on your time, not theirs. When you need to meet with them, they make themselves available.
- Can get you an extremely competitive rate
- They can get you a higher approval amount
- Even with so-so credit, they can find you a lender
- They will take care of all negotiations for you
- They can sometimes cover the cost of appraisals and inspections
There aren’t really any disadvantages when it comes to choosing a mortgage broker, as they always have your best interest at heart and work for themselves. They have a lot of flexibility.
Advantages of Choosing a Loan Officer at the Bank:
- You can see them by appointment, and also on your time
- They will offer you perks like free banking
- They might offer to pay for the appraisal
- Since they work for a bank, it’s unlikely the bank will close down
- Home equity line of credit is available
One of the biggest downfalls in dealing with a bank loan officer is you have to do all of your own negotiations. If you’re not a good negotiator then you probably won’t get the best deal possible. You will also have to visit different banks to shop around, which can be very time consuming, plus you’ll won’t get rates better than what a mortgage broker can find for you. If your credit history isn’t superb, you can simply count yourself out. Since loan officers have supervisors, any special request you make will also have to go through them for approval first.
Essentially, it’s a decision you’ll have to make on your own. If you do decide to go with a bank, you’ll soon realize how much of a headache it can be. So, if you’re not persuaded yet, you will be soon enough when you experience it for yourself.
You always have an option to speak to a mortgage broker to find your best deal and rate. Request a consultation at AKAL Mortgages to explore your options.
When we say Yes, we stand behind our promise!