Obtaining a Mortgage: Broker or Bank?

For most home buyers today, part of the buying process includes finding a bank that will lend you the money you need to make your dream home a reality.\r\n\r\nWith so many different lenders, banks and brokers available to work with you on your home mortgage application, it’s hard to figure out where turn to for assistance with your financing. The terms “mortgage banker” and “mortgage broker” are often used interchangeably by those who are not in the industry. That said, the fact is that these two types of industry professionals are more different then many people realize.\r\n\r\nA mortgage broker is an independent agent who is not affiliated with any specific lender or bank. The broker charges a fee to assist you with your loan, and this includes shopping your loan around to help you find the best deal possible. This service saves you time and money. The idea is that the mortgage broker understands the mortgage business. They’ll work with you to determine which type of loan (fixed, variable, how many points you should purchase, etc) makes sense for you. Then, they’ll go around and get multiple offers from several banks. They’ll work with you to choose the best one.\r\n\r\nA mortgage banker is a professional who is affiliated with his or her bank. This professional will only structure loans through that specific lender. This limits your options with regards to financing, but it also eliminates the middle man. You will not have to pay an additional fee to the broker, so there is a possibility to save money by working with a mortgage banker. However, in order to ensure that you get the best deal possible, you will need to shop around on your own.\r\n\r\nThere isn’t one clear option that is best for everyone. Both mortgage brokers and mortgage bankers provide you with real benefits, and both may help you to structure a great deal. However, your knowledge of the lending process and loans in general as well as the amount of time you have available to shop around for your loan should be considered before you decide which of these types of professionals you want to work with.\r\n\r\nGetting a loan is a big deal. It’s best to educate yourself as much as possible before you dive in. Spend time thinking about how much you want to spend on a home, what sort of monthly payment you can afford, and if you have a variable loan, what you’ll do if interest rates (and your payment) suddenly increase.\r\n\r\nBuying a home is a fun, exciting experience. But, it’s also the most expensive purchase most of us will make in our lifetimes. Don’t rush the process of choosing a bank/broker/banker to work with. Take the time you need to make the right choice.