BANK VS. MORTGAGE BROKER
Should I go to a bank or a mortgage broker for a mortgage?
If you have ever taken a mortgage or are about to apply for a mortgage, the one perennial question is whether it is better to apply with a bank directly or to go through a mortgage broker.
Hopefully, this will help you make the right decision.
When you go to the bank, the mortgage agent or the mobile mortgage agent is the one who will help you. Unless you apply online, the mortgage agent at the bank will ask you a few questions, especially about your income and credit. He will do some calculations and based on these he may or may not even take the application. He may just say, sorry you don’t qualify.
If you do qualify, then the mortgage agent will take the full application. The agent can offer only the mortgage products that his or her bank offers. Each bank has its own underwriting guidelines. A borrower must fit into those guidelines or the mortgage is declined.
If you are going through a mortgage broker, the best way to find one is through referrals or by doing a Google search by entering “mortgage broker near me”. Make sure you check their reviews.
The mortgage broker will also ask you about your income, consumer debt, and any other obligations. He will do the debt ratios to qualify you. He will also pull the credit report. Here is a big difference between applying with a bank and a mortgage broker. The mortgage broker has limitless mortgage products as he has business relationships with many banks. You may not qualify with one bank but another bank will jump at your application. That is the reason a mortgage broker needs to see the whole picture and not just depend on your words or memory. Maybe you co-signed for your son or daughter and forgot. So many other things like that.
The mortgage broker, instead of straight declining you, will look further into how he can make it happen for you. He may also make suggestions and may ask you if you have a co-signer or a guarantor. If you are not in a rush to get the mortgage, the mortgage broker can tell you the steps to take so you can qualify in the near future.
The mortgage broker also knows how to present your application to the bank and which bank will accept it.
The mortgage broker not only have banks as a source but also Alt-banks (Monoline banks), MIC’s and private individual investors which a private mortgage broker uses to fund the private mortgages.
Last but not the least, you should be able to get the same mortgage rate whether you go directly to a bank or get a mortgage through a mortgage broker. In fact, more than likely the mortgage broker will get you a lower rate from the bank. The reason for that is because the Mortgage brokers are wholesales. Mortgage brokers are like Costco and Walmart. The banks give them discounted mortgage rates to offer to their applicants. The banks get billions of dollars worth of mortgages from mortgage brokers. These mortgage applications are processed and ready for the bank’s approval. The banks save millions in origination and processing costs, some of which they pass on to the brokers in the form of referral fees or a commission and lower rates. You do not pay any fee to get a bank mortgage through a mortgage broker.
One last thing, if you are one of those for whom a well know bank means a lot, get rid of this notion. What difference does it make to you whom you get the mortgage from? You are not giving the money. You are taking the money. If anything, the bank should worry about you, not you about the bank.
Last but not the least, the mortgage broker will give you the top service because he does not make money till your mortgage is funded.