When you are in need of a mortgage because you are looking to buy a home or refinance one, you can either work with a mortgage broker or with the bank directly.
Using a mortgage broker versus going through the bank has it’s pros and cons and you’ll have to decide which works better for your situation.
Going it alone
If you opt to go it alone, then you will be dealing with your bank directly. If you’re a regular customer and have a great relationship with your bank you may receive better terms and interest rates for your mortgage. A local mortgage lender will be more willing to work with you if they already know you and you have accounts with them already.
However, if you don’t have a good relationship with a particular mortgage bank, you should definitly shop around. In fact, even if you do have a mortgage lender it’s always good to shop around and see what’s out there. Don’t just assume your bank to going to give you the best deal.
When comparing mortgage rates and terms alone, can be time-consuming and complicated. Comparing different products and slicing through all the legal jargon is not something most people want to do.
Pros Of A Mortgage Broker
Think of a Mortgage Broker as a sort of Mortgage Guru. They know just about everything there is to know about mortgages. They follow the trends and they know which banks offer which mortgage products. They’ll also know which lenders are offering discounts or deals on home loans. But most importantly they can save you time!
A smart broker can pinpoint the best lender for your specific needs. Plus, they handle all the paperwork that comes with getting a mortgage.
Cons of Using a Mortgage Broker
Before you jump right in, you may want to consider these things before you decide to use a broker instead of a local bank, direct online lender, or other loan programs:
- Mortgage Brokers Aren’t Free. Mortgage broker fees typically range from 1%-2% of the mortgage. You also need to consider who pays the broker’s fee. While many mortgage brokers receive payment from the lender, some charge sizable fees to the borrower for arranging the loan, which you pay as a closing cost.
- Bad Brokers. Not all brokers are as golden as they may seem and instead, fo working in favor of you they work in favor of the lenders. The deep relationships that some mortgage brokers develop with particular lenders can work against you. They might steer you in there direction even though there was a better deal somewhere else.
- Not All Mortgage Brokers Are Created Equal. Mortgage brokers aren’t equally skilled and knowledgeable about loans. Some brokers may not know of all the loan deals and options, which means you won’t get the best loan out there. Look for friend’s recommendations, Realtor recommendations, Google reviews, and anything that gives you a clear picture of who you should work with.
