There is no easy way to decide between a bank and a mortgage broker when you are looking for the perfect mortgage for your needs. It becomes complicated when there is such a wide variety of mortgage products and each applicant has different needs. To make it worse, all these finance and mortgage options are usually being revised and changed. This means that a lender that had a great product a few months ago may not have the same product to offer today. Happily, there are some general guidelines that can help deciding between a bank and a mortgage broker easier.
First of all, banks have a tendency to be conservative than brokerages; their policies and practices are traditional and they will only offer you mortgage products from their institution. Banks know that having more products to offer will help them gain return customers. Because banks only offer their own line of mortgage products they usually offer better terms and discounts to their customers. Bank customers that have substantial holdings in two or more accounts should consider getting their mortgage at their own bank first.
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.
Generally brokers do not receive payment until the mortgage is closed, although some do charge a fee up front. While this can mean that a broker will be invested in helping a client obtain lending, it also means that the broker wants the client approved for any loan, and possibly one that is not idea for the homebuyer. Inappropriate mortgage approvals were a big factor in the sub-prime mortgage bubble burst of 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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