Banks vs Brokers
With a variety of home-financing options available, purchasing a home is a confusing process. It may be difficult to find the best option for you. While looking into mortgage loans, consider big banks and mortgage brokers. Research advantages and disadvantages of both mortgage options before making a decision.
The Big Banks
Banks offer a variety of loans including mortgage loans. Working with big banks is the most common option for home ownership. Known as ‘Direct Lenders,’ banks work with borrowers to manage the loans.
Advantages of Banks
By working with a bank as a direct lender, the mortgage lending process is one simple step. Contacting your lender directly leads to less complications and confusion during the homeownership journey.
Furthermore, working with banks also speeds up the mortgage loan process, allowing for a smoother loan process compared to working with a mortgage broker.
Another advantage to working directly with banks is saving money. Without the mortgage broker middleman, you will avoid paying any additional broker fees. If you plan on getting a loan from your long term bank, they may offer great rates and pricing.
Disadvantages of Banks
Working directly with a bank requires negotiating your own mortgage loan terms. By working with the bank, you will not have a broker to help you bargain for better conditions on your loan. If you have knowledge of the market, bargaining may not be a problem. However inexperienced homebuyers purchasing a home for the first time may struggle bargaining for the terms they want with large banks.
Furthermore, banks are less flexible than mortgage brokers. Banks have their own mortgage loan programs and may be hesitant against any possible changes. It is easier to get a more desirable loan with a mortgage broker rather than directly with a bank.
Although working with big banks is the most popular option, finance experts encourage exploring other options.
As professionals in the financial and mortgage industry, mortgage brokers are extremely knowledgable about the mortgage process. They understand trends and mortgage products. Additionally, they also know lenders with the best deals and rates.
Brokers do the majority of the work in the mortgage loan process. They gather all the important information such as assets, credit reports, employment documents and other necessary information to determine finances for the loan. After collecting this information, they’ll suggest which loans are ideal for the borrower.
Once all the details are set, the broker will submit the loan to the lender and work towards its approval. The broker will communicate with both the lender and borrower to ensure the process runs accordingly.
Advantages of Mortgage Brokers
Time is crucial in the mortgage processing process. It is essential to know important dates during the mortgage process.Working with a mortgage broker will save time and energy. Mortgage brokers have extensive knowledge on the market and work personally with you for successful homeownership.
Mortgage brokers search for the best suited lenders for your financial situation. Typically, the best lender is found through a mortgage broker as opposed to a bank.
Working with a mortgage broker also relieves stress for the borrower. Mortgage brokers are known as the middleman in the mortgage loan process. They negotiate with the lender on the borrower’s behalf . They also guide borrowers through the entire mortgage process. If the borrower has any questions during the process, which is often times confusing, the broker is always there to assist. Mortgage brokers handle all the paperwork and work with the lender.
Disadvantages of Mortgage Brokers
Despite many advantages, finding the right mortgage broker may be a determining factor during the home mortgage loan experience. With the large number of mortgage brokers it may be hard to decipher a good mortgage broker. Use recommendations to find the perfect mortgage broker for you.
If the mortgage broker does not have a solid understanding of the finance and mortgage industry, it may be challenging to find a good rate. Although using a mortgage broker can be beneficial, conduct some research to gain some understanding of the mortgage industry.
Some mortgage brokers may have hidden or high fees during the mortgage process. Be curious and ask questions about every cost of your mortgage loan.
Due to the constantly changing economy, the best mortgage rates may not be available. Depending on the loan obtained in the mortgage process, the borrower may end up spending more money using a mortgage broker than initially planned. In addition, closing delays may also occur when working with a mortgage broker.
Before making a final decision, consider both big banks and mortgage brokers when starting the homeownership process.