Which Should You Choose: Broker vs. Bank?

Choosing between a mortgage broker vs. bank is a serious decision. Here are the pros and cons of each to help you with your choice.

Buying a home is an exciting time in anyone’s life. For most people, it’s one of the biggest investments they will ever make.

As a new home owner, there are so many decisions to make and so many things to consider.

One of those decisions is how and where to obtain financing for your new home. How do you know which way to turn?

Navigating the path to home ownership can be complicated. You need a lender you can trust. Which should you choose: Broker vs. Bank? Let’s take a look.

Broker vs. Bank

Mortgage brokers serve as middlemen between the borrower and the bank or mortgage lender. They help secure financing for the borrower.

Mortgage brokers are growing in number across the country and are involved in greater than 10 percent of all home purchases.

During the housing boom, the mortgage business grew tremendously. Although that has lessened somewhat, the mortgage business is growing, and brokers still play a vital role in the lending industry.

For a variety of reasons, many people are choosing to enlist the help of mortgage brokers for their home financing needs.

Brokers provide a valuable service for prospective home buyers, investors, and those wishing to refinance their homes.

The Pros and Cons

As in any industry, there are certainly pros and cons to bank lenders and mortgage brokers. It’s great if you have the option of choosing the type of lender that’s best for you and your financing needs. However, if you have poor or shaky credit, your choices may be somewhat limited.

Most homeowners automatically think of a bank loan when buying or refinancing a home. But, there are other financing options to consider.

A buyer who has questionable credit or a complicated financing scenario will probably be turned away at a bank. Finding a reputable mortgage lender is often a good option in this situation.

When you are considering broker vs. bank, you should know a mortgage broker can be quite competitive with bank rates. In fact, the wholesale rates you can get with a mortgage lender are often cheaper than the bank’s interest rates.

Many home buyers will turn to their preferred bank. It’s true that financing with your home bank may be the logical choice for some. But, you still need to weigh your options. Is that really the best choice?

Bank Lender Pros

• Often have low-interest rates
• Build on an existing relationship
• Knowing the lender
• Automatic payments from your account

 Bank Lender Cons

• Bureaucratic red tape
• Overcharging
• Conservative or limited loan options
• False promises

Mortgage Broker Pros

• Broker performs all the legwork
• Option of wholesale rates
• Possibility of lower rates
• Better able to handle complicated financing
• Less red tape, easier process

Mortgage Broker Cons

• Possible overcharging if not reputable
• False promises
• May have limited access to certain banks

Buyer Beware

As you consider the choice of broker vs. bank, there are pros and cons to each, of course. But, your journey through the financing process can vary greatly depending on the lender. Just another reason to choose the right one.

It’s true that some banks may try to overcharge you. But, the same can be said for certain mortgage lenders. That’s why it is necessary to practice due diligence to find the best fit for your financing needs.

Like any business, banks aren’t all good or bad, and neither are mortgage lenders. It’s so important to look at your options, do some research, and get references from those you trust.

A Closer Look at Mortgage Brokers

If you have decided to use a mortgage broker for one reason or another, it’s crucial to have confidence in the mortgage broker you choose. After all, you are trusting them to handle a very important investment. Here are some things to consider when choosing the right mortgage broker.

You Have More Choices

Choice is probably the top benefit for choosing a mortgage broker. Think about this. Your broker has access to multiple banks’ products. That means more options for you. Compare this to a banker who only has access to their own products.

Experience with Home Financing

Many mortgage brokers have been in the industry for a long time. They are often in it for the long haul. They may own their own business and have lots of experience in home finance. You want to find a reputable mortgage broker who is committed to the needs of their clients. Be sure to find out how long they have been in business and check their service ratings before making a final decision.

Specialized Assistance

For those who may be seeking specialized assistance with financing, a  specialized broker is key. For instance, if you want to begin investing in properties, you need an expert in that area. You want someone with specific knowledge in that area. Banks usually do not specialize in certain areas but instead, try to do it all.

Less Red Tape

If you have ever purchased a home, you know it can be a long and arduous process. It’s can be truly frustrating to deal with all the paperwork and red tape. Keeping track of the financing process and following up can be time-consuming and confusing. A reputable mortgage broker does the work for you and keeps you informed all along the way.

Personal Service

In business, it’s always better to have that personal touch. A good mortgage broker is like your own personal banker. They focus on one area in the banking industry and make sure your specific needs are met. Often, they own the business, and their reputation is on the line. Personal service is in both the broker’s and your best interest.

Are you in the process of choosing a lender? Whether it’s time to purchase your first home or refinance your current home, you need a lender you can trust. At floridamortgage.com we specialize in home mortgages and getting the best possible financing for you. Contact us today and let us help you get the financing you deserve.