Introduction – What are my options when securing a new home loan?
When it comes to securing a mortgage, you have a few options. You can go directly to your bank, although banks only offer their in-house products, or through a mortgage broker. Both of these options can help you achieve your mortgage goals, but there are a few things to consider. We’ve broken down some of the primary advantages and disadvantages of these choices.
So, what’s the distinction between mortgage brokers and a bank?
As mentioned previously, banks only offer their in-house products. This can sometimes be very limiting and harder to qualify for due to stricter guidelines with fewer products. However, if you have a long-standing relationship with a particular bank, they are oftentimes able to offer you great rates and pricing since they already have an established relationship with you and are familiar with your financial standing (aka your ability to pay them back). It is entirely situational. However, there are some other cons to financing through a bank. When you work with a loan agent at a bank, it is important to keep in mind that they don’t represent you, they represent their financial institution. Their financial interest is in their employer. They often times have stricter rules and guidelines, sometimes resulting in a high chance of denial.
Mortgage Rates will differ depending on the bank and depending on the brokerage.
A mortgage broker acts as an intermediary between you and direct lenders and has access to numerous lenders. They can select a particular lender and program depending on your particular needs. Once a lender is determined, the loan officer works between the both of you, collecting necessary documents, and communicates with the lender’s underwriting to fund your loan. Loan officers at a brokerage represent you and your interests rather than a specific lending institution.
How to choose between a mortgage broker and a bank:
Both can be very viable options. It is wise to review loan options for both a mortgage broker and your bank to compare. One isn’t always better than the other and it is beneficial to weigh your options from multiple sources. If you have an established relationship with a bank and have gotten a mortgage through them before, they will likely be able to offer you great financing. If you are in need of a more personalized loan or want access to a more variety of loans, a brokerage may be the solution to your mortgage needs.
Prequalifying for a mortgage through both a bank and mortgage broker will help you know your options and compare Mortgage Rates.
A mortgage loan is a significant financial commitment. It is important to weigh all your options to guarantee you are receiving the best financing. Not only that, but you have to consider your goals and long-term plans. Circumstances change and it’s important that your mortgage aligns with your current circumstances and goals. Mortgage professionals from both banks and brokerages have experience and industry knowledge that can help guide you in the right direction. At the end of the day, it really comes down to service quality and rates. There isn’t always a wrong or right option.