When it comes time to take out a mortgage there are many things that make it difficult to decide between a bank and a mortgage broker. It is a complicated choice because of the needs of each borrower and the sheer amount of different mortgage products to be considered. The choice is not simplified by the fact that mortgage products are generally under constant revision and changes are hard to keep up with increase the difficulty of making a wise choice. This means that if you found the perfect mortgage and lender a few months ago, it may not be the best choice now. However, this general guideline can be helpful in making your mortgage lender choice.
Banks generally have very traditional policies and practices in place. You would be hard pressed to find a bank offering any mortgage products beyond what they have to offer. However, banks know it is important to be competitive, especially with their established customers. Therefore, bankers can and do offer better loan terms and discounts to their existing customers when they shop for a mortgage. Having an established banking relationship with fairly substantial holdings in two or more accounts means that your bank is the best place to start looking for a mortgage.
Obtaining a mortgage through a brokerage may be a better choice if there is no strong relationship with a banker. A broker has many different products to offer because they represent several lenders with a wide variety of financial products. A good broker can do a lot to help find the ideal mortgage by studying the applicants situation completely so they fully understand the needs of the borrower. This puts them in a position to recommend the best possible mortgage product and lender for an individual. A broker can be invaluable by doing much of the beginning application work and advising clients on the best way to display their current financial statements.
It is important to note that although mortgage brokers may charge some fees up front, most do not get paid until the deal is closed. On the plus side, this means that the broker has a vested interest in helping the client get approved for a mortgage. On the negative side, it means that the broker has an interest in getting approval for any mortgage, not necessarily the one that is in the best interest of the client. Getting people approved for inappropriate mortgages was one of the causes of the sub-prime mortgage bubble that burst in 2007.
Once the decision to use a mortgage broker has been made the next step is to make a list of brokers to check into. Start by gathering names from friends and family who have worked with brokers, and also the names of local brokers. Then you can begin to research, making sure they are properly licensed, if there are many customer complaints about their service, and if the broker has had legal difficulties. You can check this information with news sources, the Better Business Bureau, and the Attorney Generals website. At this point the list should only include those brokers that have a sterling reputations and no problems with licenses, legal problems, or customer complaints.
Once a homebuyer has researched the list and narrowed it to reputable brokers then it is time to interview or consult with each one. Consultations are important because each broker will have a different group of mortgage projects to offer. Interviewing brokers gives the homebuyer a pretty good idea about which broker can help them get the best mortgage for their needs.
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